The Frugal Admin: Office 365 tempts me to give up Google Apps, and it will tempt you

There's no question that I like what I see in the demos of Office 365. A little research makes me want it even more. But I'm cheap, and so are a lot of the small businesses it supposedly targets. I think it can be competitive for small business and also end up selling a bunch of Windows phones. But can it compete with free?

Office 365 really does look better, richer, and cooler that Google Apps for Business, but it can be much more expensive. Many businesses will be willing to pay for the nice stuff, at least for a while, but most small businesses don't spend a lot more money than they need to on these things. I like to think of myself (and my domain which is both for my business and personal use) as one of those cheap small businesses.

My personal domain is a Google Apps for Business domain. About a year ago I switched to it from a hosted Exchange plan for a bunch of reasons, but a big one was money. So I'm extremely leery of changing to a more expensive solution.

The cost of Office 365 is complicated. I'm paying $5 per user/per month with Google Apps and there is a $6 per user/ per month plan for Office 365. That's the "Office 365 for professionals and small businesses (Plan P)". Microsoft also has a set of "midsize businesses and enterprises" plans running from $10 to $27 per user/per month.

Now, I could probably get away with the free version of Google Apps, as could a lot of very small businesses. I've helped set up a few local non-profits on it and it works great for them. The one thing that's holding me back is that my wife loves Outlook and isn't as adventurous or as cheap as I am, and Outlook sync is only in the business version. Yes, I'm in a cheap-as-I-can-get-away-with frame of mind these days, and my personal experience is that a lot of small businesses work that way. (Google also has a special Google Apps deal for non-profits.)

It's probably worth noting that different vendors have different notions of what a "small business" is. I used to write for Fortune Small Business and they defined it as under 100 employees. I have heard higher numbers from other sources. Some companies have another classification for very small businesses, maybe under 25. But there are zillions of businesses with just a few employees, definitely under 10. These businesses very often get the shaft from the computer industry and business services (telephony is a good example).

A complicating factor: Office 365 isn't meant to be an online-all-the-time service like Google Apps. It's assumed that the user will have a desktop version of Office and that he or she use the online service when it's not available. This is an interesting proposition. On the one hand it makes Office 365 even more expensive that it seems, but the fact is I have a copy of Office on all my PCs. It's necessary because the Google Docs apps are, to put it kindly, rudimentary, especially the spreadsheet.

I should also add that Google expects Docs to start using HTML 5 Structured Storage to allow some offline access by the end of the year. I'm not sure how rich and usable that will be.

So Office on the desktop is kind of a sunk cost, although it would mean that if you want to go with the cheaper ($150 vs. $280) "Home and Student" edition of Office, the only one left without Outlook, you could get away with it. (WARNING! "The retail license terms for Office Home and Student 2010 allow for installation on up to three home computers. Not intended for use in any commercial, nonprofit, or revenue generating business activities, or by any government organization".)

So to sum up where we are so far, let's compare the various options from the point of view of The Frugal Admin (me, and me as a proxy for the cheap small business owner).

• Google Apps (free) -- Gmail, Calendar, Docs and Sites. All with your domain name. Also other Google apps like Reader, Blogger Picasa. Up to 10 accounts, 7GB limit each for Gmail, various other limits for other apps. You can buy more storage.
• Google Apps for Business -- Everything in the free version plus 25GB limit on email. Google Video for Business and Google Groups for Business. BlackBerry and Microsoft Outlook interoperability. SSO, forced SSL, custom password strength requirements. 99.9 percent uptime guarantee SLA and 24/7 support. $50 per user/per year or $5 per user/per month.
• Google Apps non-profit -- same as Business deal, $30 per user/per year
• Office 365 Plan P -- Email, calendar, contacts, personal archive, and 25 GB mailbox storage with 25 MB attachments. Online document viewing and basic editing capabilities with Office Web Apps. View files from mobile devices. SharePoint Online. Instant messaging, presence, online meetings, desktop sharing and PC-to-PC audio/video calls with Lync Online. Antivirus/antispam with Microsoft Forefront Online Protection for Exchange.
• Office 365 midsize businesses and enterprises -- Plan P and a whole lot of stuff neither I nor any other small business will ever use.

I went into this story thinking that Office 365 was too expensive and would end up seeming like a luxury. But going through this table my conclusion is that the real contest is between the free Google Apps and Office 365 Plan P. Google Apps for Business at $5 per user/per month or $50 per user/per year is just not worth it in the face of $6 per user/per month Office 365.

I want to be able to use Outlook again. I'm sure Microsoft's online Word and Excel are better than the toys Google puts out. For years I've wanted to use OneNote, but the immobility of the notebooks makes it impractical. Office 365 may change that.

Another thing about OneNote: It's supported on Windows Phone. In fact, all the Office Apps are probably supported very well on Windows Phone. I'm sure I'm not alone in thinking that my next phone might be a Windows Phone.

Larry Seltzer is a freelance writer and consultant, dealing mostly with security matters. He has written recently for Infoworld, eWEEK, Dr. Dobb's Journal, and is a Contributing Editor at PC Magazine and author of their Security Watch blog. He has also written for Symantec Authentication (formerly VeriSign) and Lumension's Intelligent Whitelisting site.