Microsoft Office has been the popular long-standing choice for businesses that want an all-in-one software product.  However, Google Apps may be gaining ground on the company’s main audience.

Microsoft has often focused on the business consumer rather than the individual.  Their Office package is seen in many companies as the only option for handling documents, spreadsheets, and presentations.  However, according to a report by The New York Times, that may be changing.

Which is Best for Businesses Today: Google Apps or Microsoft Office?

Google Apps has been popular primarily with smaller businesses, but that seems to be spreading to the larger companies now.  According to this report, Google won 23 of the 33 contracts with the federal government in 2012.

Why is Google Gaining Ground?

One big reason for the surge in popularity is price.  As businesses try to find new ways to cut costs, they begin looking at such items as their software packages.  Google charges $50 per person per year for the use of their product where Microsoft starts at $72 for a year.

Microsoft has offered more services with their product such as Lync and Sharepoint, but Google is now providing more of those services, many for free.  Another area where Google offers more than Microsoft is in the fact that they have web-based email.  This makes it easy to check your email from anywhere, which is of prime importance as more people are conducting work from mobile devices on the go.  Microsoft does have email storage with Outlook.com, it is not tied in with the email service.

As Google offers more to its business customers with the Google Apps, Microsoft is going to have to rethink its plan to stay competitive.  This includes price and product offerings and may require some major changes to keep their customers loyal to the brand.

This ‘internal only’ video shown at Microsoft 2011 MGX conference shows 1 way Microsoft thought about marketing Office 365 against Google Apps. In the long run though, they’re going to have to up their game rather than discredit Google’s privacy policies if they want to stay ahead of the pack.

[Image via scalejacker]