Webmail wars: why Google and Microsoft are doubling their free email services and apps

Google and Microsoft both recently announced updates to their messaging services and apps, offering a whole new range of features and new designs. For consumers, much of the messaging service is free, so why are Microsoft and Google still locked into what appears to be a heated email horse race?

The answer comes down to a huge number of companies that haven’t updated their productivity software in years and are expected to eventually move to cloud suites like Microsoft Office 365 and Google’s G Suite. By investing in free email now, businesses hope to attract businesses to these more lucrative productivity applications later.

“Email remains a very important tool for businesses,” said analyst Patrick Moorhead of Moor Insights & Strategy. “Sure, the chat-based workflow (like Slack) is new and cool, but it’s also very small right now and needs to be scaled up by email. Both (Microsoft and Google) are improving their game to become more useful tools for people. Google uses mail as a gateway to extract data and create profiles where Microsoft focuses on the preference for its productivity tools.

A survey of IT professionals found that 68% of businesses are still running at least one copy of Office 2007, which Microsoft stopped supporting last fall. Additionally, the Spiceworks online community survey for IT pros found that 46% of organizations always use at least one instance of Office 2003 and 15% use Office XP.

Moorhead said “none of these companies” are winning “the grand prize” for the future of work “with email, but they must constantly improve the experience and capabilities, as email remains an essential tool.”

Most of the growth in email usage has occurred on mobile devices, but webmail usage has also increased, increasing 4 percentage points last year to a total of 31 % of all emails opened, according to Litmus Email Analytics. Gmail has been the main driver of this growth, with a 21% market share, up from 16% in 2015, according to a Litmus study.

Source: Litmus email analysis

Microsoft has introduced bill payment reminders in Outlook.com, its email and calendar. Outlook also offers suggested meeting locations as well as enhanced RSVP tracking.

Google, which typically targets mainstream email users, has introduced features designed to appeal to users in the workplace. In addition to a new design and smart replies added, G-mail can now snooze emails so that they reappear later.

But it will be difficult for Google to significantly reduce Microsoft’s market share, according to Spiceworks analyst Peter Tsai. After dominating workplace productivity for decades, Microsoft Office remains the most widely used productivity software in the workplace, with 82% of businesses in the US, Canada, and UK using a version on Microsoft Office site.

In contrast, 17% of businesses use Google’s G Suite and 16% use Google’s free apps. According to Spiceworks, 3% of businesses are expected to adopt G Suite and an additional 2% are considering adopting free productivity apps from Google.

Tsai pointed out that Microsoft has “been deeply entrenched” in businesses in virtually every sector of the economy since the 1990s, and that isn’t expected to change anytime soon.

Yet, he said, Google is a formidable “newcomer” that can gain market share in the long run. For example, he said, Google’s productivity apps are popular in schools. Fifty-four percent of educational institutions use G Suite, he said. (Twenty-nine percent of them use Google’s free apps, according to the study.)

A strong presence in schools could pay off over time, Tsai said. “Millennials will be more influenced by what they use at home,” he said. “It may take a long time for Google to gain a foothold. It could happen someday, but not in the next few years. “

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