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G Suite for business faces uphill battle against Office 365

Google continues to invest heavily in G Suite for business, adding new features, but the collaboration platform struggles to keep pace with Microsoft Office 365.

Jonathan Dame
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Published: 11 Jan 2019

G Suite for business users gained several new features at the start of 2019 as Google retools its cloud productivity suite to attract more midsize businesses and enterprises.

Despite these efforts, Google will likely struggle to keep pace with the growth of Microsoft Office 365 if past trends continue this year, analysts said.

The latest G Suite for business updates include better security alerts and new instant provisioning tools for admins, as well as simple interface improvements for end users, including the ability to produce multicolored bar graphs in Google Slides.

Google also launched a beta program last month that will let users without a Google account edit documents, spreadsheets and presentations stored in G Suite. Those users will get access to the files using a pin code generated by the document's owner, who will be able to revoke that permission at any time.

These types of updates are meant to better position Google to sway Microsoft Office 365 users over to its G Suite collaboration tools.

G Suite for business vs. Office 365

Platinum IP, an 85-person software and logistics firm based in Meridian, Idaho, switched from Office 365 to G Suite for business nearly four years ago, shortly after its founding. Scott Christman, the company's owner, found the Google cloud service to be faster and more reliable than Microsoft's.

More important, Platinum IP has been able to use Google's open APIs to customize how it uses Google Maps and other G Suite services. Those API's were the "primary reason" the company made the move, Christman said. Microsoft, meanwhile, is a notorious closed system.

"There are still occasions when we have to use an Office 365 app," Christman said. "There are a handful of functions that are still a little bit easier in Excel than Google Sheets. But they are few and far between, and for 99% of all users out there, they would never know."

Google was the early leader in cloud collaboration technologies, but that changed around 2014 when Microsoft got serious about selling Office 365, said TJ Keitt, analyst at Forrester Research.

While Platinum IP is a small company, Google has stolen a handful of big contracts from Office 365 over the past couple years, including Verizon, Nielsen Holdings PLC and Colgate-Palmolive. But recent data suggest that the growth of G Suite for business has plateaued as Office 365 adoption has accelerated.

"What is clear is there is a large lead that Microsoft has built," Keitt said. "It's also clear that Google is invested in this area, and they are acquiring clients and they are doing work in this area."

A 2018 survey of 135,000 organizations worldwide by Bitglass Inc., a cloud security firm, found that 24.8% of businesses were using G Suite -- a slight dip, from 24.9%, in 2016. In contrast, the report found Office 365 deployments grew from 34.3% to 56.3%.

Meanwhile, Microsoft cloud email has been growing at twice the rate of Google's among public companies in recent years, according to Gartner. Among those firms, 14.4% buy from Microsoft and 9.4% buy from Google.

In Gartner's tracking of public companies, use of Microsoft's cloud email has grown two percentage points, on average, every analysis period since 2016, compared to an average growth rate of 0.8 percentage points for Google's service.

G Suite for business clearly remains a priority for Google, said Jeffrey Mann, analyst at Gartner. "They are still investing. They are still coming out with new stuff. If anything, [G Suite] is playing a more important role," he said.

Google released a team collaboration and video conferencing app last year, Hangouts Chat, and has begun developing a cloud PBX system. With those initiatives, Google is playing catchup with Microsoft's Skype for Business and Teams.

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