What do you call an application service provider with 85,000 very picky customers? There are many possibilities, but the answer I'm looking for is Microsoft, which has long provided its employees with access to the full range of its collaboration and communication solutions. In recent years, Microsoft has added services for external customers, including Hotmail (now known as Windows Live Hotmail) and Xbox Live. However, the company has refrained from entering the market of actually providing hosted collaboration and communications services to other organizations, preferring instead to work with partners who offer such services.

In the past few years, Google has gathered a lot of favorable press for itself with its portfolio of Google applications, the best-known of which is probably Gmail. By adding Web-based productivity tools, as well as security services based on its acquisition of Postini, Google has made a niche for itself with a low-cost set of reasonably usable business services. It's hard to compete with "free," and Microsoft has no doubt felt a frisson of worry as Google Apps' market share has continued to edge upward.

With the recent announcement of Microsoft's new Microsoft Online Services portfolio and the launch of beta versions of the Exchange Online, SharePoint Online, and Office Communications Online services, Microsoft is continuing its expansion into the Software as a Service (SaaS) world by planting itself squarely in the same space that Google is trying to claim as its own (see "Microsoft Online Services Now Open to Businesses of All Sizes"). There are three big differences between their respective offerings.

The first difference, of course, is price. Microsoft hasn't widely released pricing information, preferring instead to send people to its sales representatives. I think it's reasonable to infer two things from this fact: first, that Microsoft Online Services will probably be priced higher than Google's offering; and second, that Microsoft will follow its past pattern of offering attractive (perhaps even aggressive) discounts to early adopters. We'll have to wait and see, of course.

The second big difference between Microsoft's and Google's offering is maturity. Microsoft has taken a very mature set of self-hosted products and added an online services infrastructure to them. Google has taken a very mature online services infrastructure and added productivity services. The question thus becomes whether Google can add application features faster than Microsoft can add online capabilities. Based on the rate at which Google has added functionality thus far, I think the answer is no. Exchange Server, SharePoint, Microsoft Office Communications Server (OCS), and the Microsoft Office system represent millions of hours of development over a very long period of time—an accumulated pool of work that Google would have a very hard time matching. On the other hand, Microsoft has already done much of the work necessary to build out a robust global network to host its applications; it's probably much easier for Microsoft to catch up in this area than it is for Google to catch up with applications.

The third, and ultimately deciding, factor is functionality. Microsoft hasn't announced exactly which features and functions will be included in Microsoft Online Services—after all, they're still in beta. However, the feature sets of Exchange, OCS, and SharePoint are so much richer than anything Google has publicly shown that even a subset of these features will make a compelling argument in favor of Microsoft's solutions.

The broader question is what this means for those of us who currently maintain our own Exchange and OCS infrastructures. Will you be switching? What would it take to convince you? Let's discuss this topic in the Windows IT Pro Exchange and Outlook forum. You can also drop me a line to let me know what you think.