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Los Angeles City Hall becomes tech giants' battlefield

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As Google and Microsoft battle for dominance in technology, a skirmish in Los Angeles City Hall is offering a rare public glimpse into a rivalry that could help determine the fortunes of both companies -- and, quite possibly, how workers in the future will communicate.

The two tech giants are clashing over a $7.25-million contract to replace L.A.'s outdated e-mail system. The stakes are high enough that both companies have fielded teams of lobbyists and executives to press their case in City Hall.

City officials have also been told that Microsoft Chief Executive Steve Ballmer and Google CEO Eric Schmidt "would be more than happy to come and visit with you," said City Councilman Tony Cardenas, who chairs the council's information and technology committee.

Google is widely believed to have the most to gain from a victory as it seeks to challenge Microsoft's long dominance in office e-mail and document software.

"It would be a flagship contract that they can market to the rest of the country," Councilman Bernard C. Parks said. "When you buy it and they put on their masthead that you're one of their customers, you find a trail of cities that say 'I'll follow suit.' "

Microsoft's Office software has been the engine driving business documents and e-mail for more than a decade, accounting for 70% of an estimated $20-billion annual market.

But Google is posing a threat with its Google Apps office software, which is anchored by its popular Gmail service. Thousands of colleges, including USC and Notre Dame, and nearly 2 million businesses have adopted Google Apps, the company says.

Most schools and small businesses get Google Apps for free, but the company has also converted some heavy corporate hitters into paying customers, including biotech company Genentech, electronics maker Motorola and chip maker Fairchild Semiconductor.

As the battle plays out in executive suites and information technology departments around the U.S., the outcome could determine whether businesses continue to store software and data on their own computers, as most do now, or allow companies such as Google to store it all online in the so-called digital cloud.

"This is a story of two very large companies going head to head in a battle for the future of the heart and soul of the technology world," said David B. Yoffie, a dean and professor of business strategy at the Harvard Business School. "If Google wins, the way that we look at our day-to-day computing will be 100% focused on the cloud."

Google's main selling points are the cost and convenience of its Web-based approach. Because all data and programs are stored on the company's global network of servers, organizations can jettison their large data centers and the staff members who look after them.

"If there's anything that's making it happen in 2009, it's budgetary problems," said Dave Girouard, the president of Google's Enterprise division. "It's a good time to have a dramatically lower-cost solution."

Many users like it too: Those capacious Gmail accounts don't clog up the way old-school e-mail in boxes do. What's more, documents and spreadsheets can be accessed and edited through any Web browser, at the office or otherwise, instead of being saved on a single computer's hard drive.

But Microsoft has sought to take some of the shine off Google's vision of computing.

In an interview, Microsoft executive Ron Markezich contended that Google's cloud model was still something of an experiment for business customers. Google lacks Microsoft's long experience with companies in highly regulated industries such as pharmaceuticals and financial services, he said, where security and the smooth flow of data are paramount.

That argument may have been bolstered by a pair of Gmail glitches this month that shut down the service for hours, leaving tens of millions of users unable to access their e-mail. That could be particularly troublesome for a big city such as Los Angeles, said Markezich, who is vice president of Microsoft's Online division.

"My genuine concern is using a service built for consumers as a complex, public sector service," he said.

In response to doubts about its experience, Google notes that it has replaced mail systems at dozens of large corporations and has provided search and other services to an array of federal and municipal organizations.

One of those clients is Washington, D.C., which a year ago launched a pilot program to install Google Apps. Since then, the nation's capital has seen productivity gains and cost savings, said its chief technology officer, Chris Willey.

But it did not replace its older e-mail system, as Los Angeles would. Of Washington's 38,000 employees, only about 4,000 have chosen to switch to the Google system -- the rest have remained on Microsoft Outlook.

Mayor Antonio Villaraigosa favors the effort to modernize the e-mail system. His spokesman, Matt Szabo, described the current software, which is neither from Microsoft nor Google, as a slow, "inefficient, crash-prone e-mail system."

Los Angeles city officials last year solicited bids for a new system. Both Microsoft and Google submitted proposals; Google Apps got the nod because city administrators believed it would be cheaper and less labor-intensive.

The contract has passed one council committee and must still pass a second before it goes to a final vote by the full City Council.

No date has been set for that vote, but lobbyists and representatives from both companies have descended on City Hall in teams of 10 at times, council members said, armed with digital presentations and documents to make their cases.

According to records from the city's Ethics Commission, Microsoft has spent more than $40,000 this year on all Los Angeles city-related lobbying, including by Fernando Guerra, a veteran consultant who is active at City Hall. Google and Computer Sciences Corp. -- the company that hopes to install the Google system -- registered lobbyists this year as well, paying them less than $10,000 in the same time period.

Microsoft has also sought to undermine the claim that Google offers the potential for big savings, pointing to what it calls optimistic estimates by city officials. The city's projected savings are based in part on expected gains in worker productivity, a quantity that is difficult to nail down.

Those concerns were repeated by Parks, who at a recent technology committee meeting grilled Randi Levin, the city's chief technology officer and a Google proponent.

"Are you saying where these savings are coming from?" Parks asked. "Are they real dollars -- dollars we can depend on down the road?"

The matter is expected to go to the budget committee, headed by Parks, on Oct. 5. Parks' office said he was still reviewing the proposal and had not yet stated his position.

Critics of the Google proposal have also raised the touchy issue of data security. If the city's e-mail and documents are stored on Google's remote servers, the city would be relying on the company to protect potentially sensitive information, including from the Police Department and city attorney's office.

A memo circulated to city officials by Microsoft representatives argued that "Google is not terribly transparent about security issues," before adding that "Microsoft believes Google can be secure, but do they have the experience to get that way fast. We know how hard those growing pains can be."

In response, Google asserted that its cloud-based system can quickly deploy upgrades and security updates to all of its customers, something that is less seamless when organizations maintain their own computer systems on site.

"In the last 12 months alone, Microsoft has released 70 security patches, 41 of which were classified as 'critical' security issues," Google spokesman Andrew Kovacs said in an e-mail. Because those security updates are often not installed right away, Kovacs wrote, "the bad guys have a road map to the flaw."

Google recently announced it would launch a "government cloud" next year, designed to meet the more strenuous security and regulatory requirements of government entities.

To date, some of Google's highest-profile converts have been college campuses. Officials at UC Davis, Notre Dame and Arizona State University all reported that students were happy with the system -- and that administrators were happy with the cost.

"I think it's one of the most amazing things we've done for students in the last five years," said Kari Barlow, an assistant vice president in Arizona State's technology office.

With those victories under its belt, Google appears bent on gaining even more ground. In a rare move, the advertising-shy company launched a billboard campaign in San Francisco, New York, Boston and Chicago last month encouraging businesses to switch to Google Apps.

"Just heard about going Google," the boards said on the first day of the campaign. "I want to know more."

david.sarno@latimes.com

Times staff writer David Zahniser contributed to this report.

Copyright © 2014, Los Angeles Times
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