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Microsoft (News - Alert) Office has long been considered the only 'serious' option for productivity software. After all, the suite has been around since 1989, giving it plenty of time to improve and evolve. In comparison, Google's (News - Alert) cloud-based suite, Google Apps, was initially considered less stable and lacking the kind of features companies use. However, Google Apps has matured nicely and now stands as a legitimate challenger to Microsoft's Office 365 offering.

Initially, Google had only really focused on targeting small businesses that didn't need the full features of Office and were looking to save money. But as of late, Google Apps has started to capture the interest of big companies, with a number of major clients signing on to use the cloud suite in 2012 — including Hoffman (News - Alert)-La Roche, a Swiss drug company, and the U.S. Interior Department.

Google's primary advantage has long been its pricing. The Google Apps suite includes word processing, data entry, spreadsheet and presentation capabilities for $50 per year per business user. Meanwhile, Microsoft Office 2013 is expected to cost $400 per year per user, albeit with bulk discounts.

That said, comparing Google Apps to Office 365 is more fair with the cloud suite costing $6 per user per month, totaling $72 per year.

Yet, while Google Apps has done well in the past year, with the recent decision to eliminate free usage of the cloud productivity suite in the New Year, it's possible that Office 365 could begin to capture more of the small business market. The thinking is that while the gap between free and $72 per user per year is obviously wide, the gap between $50 and $72 is much smaller.

With the introduction of Office 365, Microsoft has created a highly flexible product in comparison to its traditional Office suite, allowing smaller businesses to pick and choose exactly the features they need to thrive.

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