Interior Department Drops Microsoft in Favor of Google Apps

The ongoing battle between Microsoft Office 365 and Google Apps has taken another interesting turn: Following a two-year legal battle involving the two cloud heavyweights, the U.S. Department of the Interior has awarded a seven-year, $35 million contract to Google (NASDAQ: GOOG) partner Onix Networking to provide Gmail and Google collaboration tools for the agency. The contract calls for Onix to move the department’s 90,000 e-mail users from a siloed combination of Microsoft (NASDAQ: MSFT) Exchange and IBM (NYSE: IBM) Lotus Domino to single Google platform.

Here’s the background: In 2010 the Interior Department gave Microsoft a contract to supply its collaboration software. Google and Onix Networking sued, claiming the department had only considered Microsoft before granting a five-year deal worth approximately $49 million. In September 2011, Google dropped the lawsuit after the department announced it would nullify the contract. How’s that for irony?

In the department’s official release, Secretary of the Interior Ken Salazar said: “This award is a great example of how our IT Transformation initiative is already delivering value to the Department. Implementing a department-wide, cloud-based e-mail system that helps modernize the ways we do business while cutting costs is good government, plain and simple. We will continue to identify efficiencies to save time and taxpayer dollars using advances in technology to provide better service for less.”

In March 2012, Google Apps reseller Cloud Sherpas used a three-hour Microsoft Office 365 outage to criticize Redmond’s “subpar track record in the cloud.” Also in March, the State of Colorado awarded an e-mail contract to Google Apps and partner Tempus Nova, joining Utah, Wyoming and Maryland as Google Apps customers.

The Google Apps/Office 365 confrontation will no doubt continue, and Talkin’ Cloud will be watching.