Microsoft cuts e-mail price in bid to ward off Google

Microsoft will now charge US$10 a month per user for its Business Productivity Online Suite, down from US$15, said Vice President Ron Markezich. The company also has signed up new customers such as McDonald's Corp. and AON Corp. Microsoft and Google are seeking customers that want to outsource the management of e-mail systems. The competition has helped buyers negotiate lower rates from Microsoft. Even before the price cut, Rexel SA got Microsoft to slash about 30 percent off its cost to roughly match Google's offer, said Olivier Baldassari, Rexel's chief information officer. “Google somehow in the process disrupted the landscape and forced Microsoft to become a bit more aggressive,” Baldassari said. “Microsoft has been very aggressive in terms of price.”

Microsoft's suite lets customers use e-mail, hold teleconferences and create internal Web sites for blogs and document sharing. An e-mail-only product based on Microsoft's Exchange software now will cost US$5 per user per month, instead of US$10.

Andrew Kovacs, a spokesman for Mountain View, California- based Google, didn't immediately return a call seeking comment.

Microsoft, based in Redmond, Washington, rose 15 cents to US$27.88 Monday in Nasdaq Stock Market trading. The shares have climbed 43 percent this year. Google, up 74 percent this year, fell US$2.13 to US$533.99.

Rexel, the world's largest distributor of electrical equipment, has 42 different e-mail and messaging systems worldwide. It wanted to save money and streamline its operations by replacing in-house software with an outsourcing contract, Baldassari said. Microsoft's customer service, along with the fact that about 75 percent of Rexel's existing e-mail systems already used Microsoft software, made the move easier, he said. Baldassari expects the switch to lower the company's e-mail costs by 30 percent.

Markezich said competition from Google, as well as International Business Machines Corp., Zoho Corp. and Yahoo! Inc.'s Zimbra, wasn't a factor in the price cut. Instead, he said, Microsoft has been able to lower its own costs and wanted to pass some of that along to customers.

Lions Gate Entertainment Corp., the biggest independent movie studio, also got a price cut from Microsoft to match Google, Chief Information Officer Leo Collins said. Collins was considering the two for e-mail service for workers at TV Guide Networks, a Lions Gate acquisition.

Collins cited workers' familiarity with Microsoft's Exchange and Outlook e-mail software and the company's customer service as factors in his decision. Now he's planning to move Lions Gate's 700 workers to the Microsoft e-mail service as well.

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