Google didn’t become as big as…well, Google… by doing anything small. The search engine giant and tech incubator has become the mainstay of industry-wide solutions in a lot of different areas by throwing caution to the wind and building on creativity. That intelligently reckless approach has served it well in a few key areas of the tech sector, but it will be interesting to see if this strategy works in taking on one of the most widely known and well-loved names in software: Microsoft.
Google has announced another plan to win customers away from Microsoft–specifically from its longstanding Office suite–by giving away subscriptions to its own Google for Work suite. Companies can submit applications to try out the Google tools for free for the duration of their contracts with Microsoft, and Google will even supply as much as $75,000 per company to help with the transition from one platform to the other.
To say Google must be pretty confident in the anticipated response is an understatement. It’s offering free subscriptions to Google for Work for up to 3,000 employees per company; at a typical cost of $5 to $10 per employee per month for the corporate subscription, that’s a loss of as much as $360,000 per new customer for the duration of that new customer’s Microsoft contract, coupled with the transition funds. And that’s just for one new customer… the total loss to Google could reach into the millions if enough new companies take advantage of this offer.
How can Google afford to take such a financial hit? According to a report on the defector incentive by ABCNews, Microsoft’s Office division accounts for roughly $23.5 billion in revenue, while Google’s advertising alone accounts for over $66 billion. And with more than 600 companies already subscribing to the Google toolbox, they’re pretty sure this try-it-before-you-buy-it approach will win over even more new customers.
As for companies considering the switch, the offer might be too good to pass up. Most companies typically pay as much as $20 per user for Microsoft’s professional Office suite, and the contracts on these deals can run for years.