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Although Microsoft (News - Alert) has had a serious advantage over Google in the business sector, Google has recently started edging its way into Microsoft’s stronghold using Google Apps. Google (News - Alert) began appealing to small and medium-sized businesses at first, but now even larger companies are catching on to the cloud-based Google Apps idea.

“Google is getting traction,” said IDC (News - Alert) analyst Melissa Webster, in reference to its competitor Microsoft. “Its ‘good enough’ product has become pretty good. It looks like 2013 is going to be the year for content and collaboration in the cloud.”

Google is not the only company in the cloud-based business game, however. Microsoft released Office 365 in 2011, and now the company offers the software in either a cloud version, or a hybrid version which sues cloud computing in addition to conventional servers.

It would seem then that Google shouldn’t have much of an advantage over Microsoft, given that the companies both have cloud-based software, but there are a few reasons SMBs and bigger companies are starting to choose Google over Microsoft.

Firstly, Microsoft does not have as attractive a price tag (News - Alert) as Google Apps does. Google charges $50 a year for the use of its product per person, and year after year this price has not changed.

Office 365, on the other hand, begins at $72 a year per person, and can cost as much as $240 a year per person, depending on added features and software development capabilities.

This means, ostensibly, Microsoft is charging anywhere from $22 to $190 more than Google is for similar services. Microsoft has made the argument that it offers more than Google does, but it doesn’t seem the differences are adding up to much. Google is catching up.

The problem is that Microsoft does not shy away from raising prices, so those looking to use Office 365 should be well aware of this possibility. The 2013 version of Office, for example, costs about $50 more than the 2012 version.

Most people expected Google to stay in the SMB business, if its product made it there at all. Microsoft already had a good hold in that market, as Office 365 gives smaller businesses the benefits most are looking for.

For instance, Office 365 is not a significant investment for businesses with little money to spend. After downloading the software, the company in question can get started immediately. With features like Web conferencing, instant messaging and remote file sharing, SMBs can focus their costs and attention where they want to, rather than wasting unnecessary funds and efforts to fly workers to meetings or use standard mail, fax or phone-calls for communication.

Despite this, Google has recently come up from the wings and started converting customers from Microsoft to its own services, and SMBs aren’t the only ones getting on board.

Now Microsoft may be starting to sweat, but you won’t see evidence of that from the company--not yet, at least.

According to Julia White, general manager in Microsoft’s business division, Google “has not yet shown they are truly serious. From the outside, they are an advertising company.”

White believes Google would only be seen as a threat to Microsoft in this area if the company offered “a quality enterprise experience” in the areas of “privacy, data handling and security.”

White may not think Google is currently doing this, but the businesses using Google Apps seem to disagree.

The future of this competition is sure to be contentious going into 2013 and throughout the rest of the year, as more companies pick Google--or, alternatively, as Microsoft continues to hold its first place in the business sector.

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