Who’s Winning the Cloud War?

Analysts look at the state of competition for cloud business among Microsoft, Google and Amazon.

by / September 28, 2011

State and local governments are expanding their use of cloud-based services, but it’s hard to pick a clear winner among cloud providers in the public-sector market.

To some geeks in government, Google’s 2009 defeat of Microsoft to run e-mail for Los Angeles was akin to Luke Skywalker’s blow to the Empire in Star Wars. By October 2010, Microsoft struck back, signing an e-mail contract with New York City, moving 100,000 public servants to its cloud. In 2011, San Francisco also took e-mail to Microsoft’s cloud and Wyoming became the first state to use the Google Apps for Government suite. These are just a few of the higher-profile examples.

Several other local governments currently buy cloud services from Google, Microsoft and other providers. Amazon Web Services (AWS) has crept up as another top contender with its growing list of federal agency cloud customers. But given that there’s no dominant player, analysts are left basing their predictions of success on the perceived strengths of the household name providers. For example, Microsoft’s cloud has the lure of offering virtually the same applications that government employees already use — Microsoft Office. Google has been positioned as a low-cost, anti-incumbent challenger of Microsoft, while AWS is viewed as the charmingly scrappy hosting provider whose services are already attained under the radar by government programmers.

Insight from a few analysts could give CIOs more focus when assessing the cloud computing trend.

Broad Services Versus Storage Only  

While Google, Microsoft and AWS are often seen as the top contenders for government cloud business, they’re not always contenders for the same types of cloud business, said Rob Enderle, principal analyst for advisory firm Enderle Group. If governments want e-mail and other business applications as a part of a cloud contract, that would typically be a contest between Microsoft and Google.

“Both Google and Microsoft are trying to provide broad services to that set of customers; Amazon is mainly storage,” Enderle said.

Enderle expects Microsoft to do best with larger governments and Google with smaller ones. For large agencies moving massive e-mail systems to the cloud, Microsoft could be viewed by CIOs as a less risky choice, he said, especially if problems arise. A CIO on the hot seat to explain technology choices may find Microsoft easier to defend, given the company’s long, tested history as an incumbent.

By comparison, Google Apps for Government is better positioned for smaller governments. “As you get down to city government, Google looks better because it doesn’t have this big enterprise mentality that Microsoft has with regard to engagement [of customers],” Enderle said, adding that Google could play into sour feelings in government about Microsoft.

“Any vendor that has been working with anybody a long time is going to have customers who are unhappy, and Google can play on that really well. It’s a challenger and without a lot of history.”  

Google often has an edge on price too, he added, which would likely appeal to smaller governments.

“[Google is] the most heavily subsidized, and [it is] trying to buy into the market,” Enderle said. “If price is your driving factor, then Google is going to look awfully good to you, particularly if you’re pissed off at Microsoft.”

Seeming to play into Google’s attractiveness to smaller governments is an observation from Charles King, principal analyst for Pund-IT Inc., an IT industry analysis firm. He said Google Apps customers typically find the product to be a satisfactory replacement for Microsoft Office, assuming they don’t need more expansive offerings, like Microsoft Publisher.

“You’re basically buying a set of Web-delivered apps that have fewer capabilities than Microsoft Office does,” King said. “The real question there is whether you need all of the bells and whistles that Microsoft provides. For many people and companies, particularly those economically constrained, a ‘good enough’ suite like Google’s could make sense.”
Regarding security, Microsoft is perceived as being the strongest, said Enderle. As evidence, he pointed to the frequent news coverage of the bounties Microsoft has offered to catch cyber-criminals. Bounty prices from Microsoft have been in the hundreds of thousands of dollars.   

“If there is a breach, they are one of the firms that are very aggressive in terms of working with law enforcement to bring the people down,” he said.

Google is stereotyped as less secure because it scans the free Gmail accounts it hosts in order to sell advertising, Enderle said. Enterprise-tier customers often believe the same applies to them, he said, even though the scanning function can be disabled in Google Apps for Government.

“The firm makes [much of] its money in advertising, so it carries the perception of being a firm that is not secure,” Enderle said. “Perceptions guide buying behavior. It may be as [much as] or more secure than the other offerings.”

If a government merely wants to store data or host a website, AWS is an attractive option. Enderle said AWS isn’t viewed as secure as Microsoft, but it’s perceived as more secure than Google and offers affordable prices. Besides being the backbone for the federal government’s Recovery.gov, AWS hosts sites for the U.S. departments of Treasury, Energy and State.

In the matter of overall market identity, King thinks Microsoft comes across as more focused on cloud services than Google, which he said, can seem all over the map to customers.

“They have tons of projects going on in tons of different areas,” King said. “The problem with that is, I don’t think the public, businesses and government have a really clear view of what Google’s value proposition will be for them as a cloud services provider. There is just too much going on.”

Cloud Under Cover

Another stake Amazon has in the government cloud market is limited use of AWS’ hosting by agency programmers for developing Web applications, said King. Enderle said he’s also heard of this happening frequently in government, usually without the CIO’s approval.

“It’s basically to test drive [the applications] online with Amazon to see how they would work in the real world,” King explained. “You get access to a significant amount of computing power without putting any kind of stress on your own data center.”        

Thanks to Amazon’s business model, these developers need little more than their government-issued credit cards to use the service, Enderle said. “When they need something fast and want to bypass process, Amazon is their favorite choice,” he said, adding that, “It is done in government whether it is a legitimate option or not. This is one of the commonest practices out there, and it’s across industry — public and private sector. It’s bubbling up to be one of those things that’s giving CIOs nightmares at the moment.”

Enderle said developers typically do this to meet deadlines and survive on inadequate funding.

Montgomery County, Md., CIO Steve Emanuel said such activity could be occurring among “distributed” IT workers in individual business departments, rather than developers in a municipality’s central IT group. Emanuel said programmers isolated in business departments could be motivated to purchase third-party hosting services on the sly.

“They cannot just load and run apps on the county systems, so this is a place where it could happen and core IT would never be the wiser,” said Emanuel.


Andy Opsahl

Andy Opsahl is a former writer and features editor for Government Technology magazine.

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