He has installed Google Apps for Businesses, which provides word processing, spreadsheets, e-mail and calendar software, for 400 people and said he planned to “convert” 900 more.

Because Google Apps performs many of the same functions as Office, but through a Web browser instead of local software, it is cheaper to own and operate than Microsoft’s desktop software, he said. An additional 1,400 people will be giving up their Microsoft e-mail, documents and spreadsheets for Google in December.

Mr. O’Brien said he was also seeing a difference in behavior. Many people can look at and work on the same content together, and access their memos and calendars from lots of different Web-connected devices. So people are starting to work together by sharing documents that are stored in the cloud. Even at this early stage, he said, “it started to change us.”

What’s happening at Journal Communications is one small win for Google and its cloud computing challenge to Microsoft’s lucrative Office division, maker of Microsoft Word and PowerPoint. But more than 4 1/2 years after Google Apps for business made its debut, the question remains how much of a dent Google is making in Microsoft’s business.

Microsoft says Google’s efforts are hardly noticeable. But Google executives say that more and bigger companies are signing up for the cloud service.

Possibly more important to Google is the way that Apps helps Google build social networks inside business. If successful, it would be a threat to Microsoft’s biggest division and would create another inroad in its struggle with Facebook to dominate users’ online lives.

“Businesses are inherently about people and relationships,” said David Girouard, who runs Google’s Apps business. Predictable things, like figuring out the supplies needed for manufacture, were “not the minimum to play,” he said. “You need to have a social system, where a guy can introduce an idea about a new supplier, and he gets input from a lot of people quickly.”

Though Mr. Girouard said that 5,000 businesses a day signed up with Google Apps, few big companies have done so, most likely because some people do not entirely trust a cloud-based service, they like Microsoft or do not want to force employees to learn a new system. So Google does the next best thing and is focusing primarily on smaller businesses. Google maximizes the appeal of documents, calendars and spreadsheets at a cost of $50 a person a year. Many companies say that is 50 percent to 80 percent cheaper than Office. Google has the deep pockets to go slow since its search-related businesses bring in over $30 billion.

But Microsoft has deep pockets too. Its Office division revenue alone is $5.6 billion.

Most corporate software is sold through big consulting firms, like I.B.M. or Accenture, but Google has yet to use a partner. “They have approached other companies, but others think it’s not in their best interest,” said David M. Smith, an analyst with Gartner. He estimates Google gets just $150 million a year from Apps, and that it is not enough to cover costs. Google says it does make a profit.

Instead, it uses the business in “asymmetric warfare” with Microsoft. “Google spends $1 to make Microsoft spend $10 defending itself, because Microsoft went after Google on search,” Mr. Smith said.

Microsoft is dismissive of the situation.

“We sell a copy of Office 2010 every second — over 100 million so far,” said Tom Rizzo, a senior director in the Office division. “Nine out of 10 customers who use Google keep Office on their desktop.”

Microsoft started its own online documents business in June, at a price of $2 to $27 a month for each employee using the service. Mr. Rizzo, a 10-year Microsoft employee, would not say how sales were, but said, “I think this has the potential to be the fastest-growing product I’ve ever been a part of.”

Article source: http://feeds.nytimes.com/click.phdo?i=cdedba407ad8882e268d9a8b8f298f15