Microsoft's Office streaming price too high to compete with Google Apps, some partners say

However, much like offshoring, you get what.. Read the rest Reply Anonymous says: Microsoft also offers a student family edition of Office. As I recall, at Costco, that's $129. That works out to be.. Learn more in the BMC ITIL Best Practices Zone. Office to their customers, the software vendor still seems to fear hurting itself more than being hurt by Google Inc. At its Hosting Summit 2008 earlier this month in Bellevue, Wash.,

Corporate customers that have purchased maintenance and update contracts under Microsoft's Software Assurance program can already stream Office to internal employees. But this is the first time that Microsoft is extending the capability to ASPs, which have long campaigned for the right to do streaming. Nevertheless, some hosting providers are unhappy about the price that Microsoft has set for streaming Office, saying it's too high to win over customers that are considering or already using less-expensive online office suites, such as Google Apps.

Google is still trying to build up its suite's credibility with corporate users. But early indications from ASPs are that streaming Office 2007 will cost four to six times what Google charges for its applications.

A license for Office Professional Plus 2007 costs $13.23 per user on a monthly basis through the reseller. I don't believe that this will attract a large number of customers currently using Google Apps," said Gagan Prakash, senior executive director of engineering at GroupSpark Inc., Burlington, Mass.- Microsoft products through other service providers. Why does Prakash think that?

Because, he said, hosting providers will need to mark up the price between 50% and 150% in order to make a profit, thereby resulting in a monthly retail price of $15 to $25 per user for Office Standard.

In order to compete with Google, Microsoft should have a lower-end offering that is very, very competitive on pricing," Prakash said. This price isn't nearly aggressive enough." Others say the cost of the streaming option may also be too high to tempt companies that currently run on-premises versions of Office.

A full-priced retail copy of Office - the kind that is bought by individuals and by some small and midsize businesses - costs about $300. Amortized over three years, that's roughly $8.50 per month. But even many small companies buy reseller copies of Office, which can be half the price or less, said Paul DeGroot, an analyst at Directions on Microsoft in Kirkland, Wash. Others simply wait four or five years, or even longer, to upgrade Office.

If you're the kind of person still using Office 2000, then paying even $10 a month is not a particularly good prospect, financially," DeGroot said. Through a spokeswoman, Microsoft declined to comment for this story.

But sources said that Microsoft has told ASPs that the prices may change and that more options, including a license that charges service providers by the number of server CPUs used to stream Office, should emerge over time. The latter license would enable ASPs to charge customers a price based on their usage of Office - an approach that could give companies whose employees are sporadic or light Office users a lower entry-level cost than the flat-fee subscription price would.

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