Microsoft pays U of Nebraska $250,000 to switch from IBM to Office 365

Corrected version

Microsoft is paying the University of Nebraska $250,000 to stop using IBM's Lotus Notes and to switch to Microsoft's cloud service Office 365.

The University of Nebraska system and its 15,000 faculty and staff will also get free subscriptions to Office 365's email and instant messaging cloud services. The school announced the change last week.

The $250,000 from Microsoft, which the university called "business incentive funds," will be used for consulting services and licenses to make the switch from Lotus Notes, as well as support services from Microsoft.

Microsoft declined to comment on the details of individual customers.

Walter Weir, chief information office for the University of Nebraska system, said, "It's what they offer, it's part of their package." He did not think Microsoft cut a special deal for the University of Nebraska. The deal is an extension of the university system's existing licensing agreement with Microsoft for server and Office software, Weir said.

Microsoft and Google have been competing to win customers for their cloud email services. Both believe that email as a cloud service is the gateway to selling more services in the cloud. Microsoft views cloud services as the next major evolution of how people use software. In the cloud, software and data are stored on remote servers run by cloud providers like Microsoft, Amazon.com and Google and accessed by people on Internet connected devices such as desktops, laptops, tablets, mobile phones and televisions.

The universities also considered competing services from Google, IBM and Dell but chose Microsoft's Office 365 over Google Gmail because Microsoft's prices were more competitive. Google normally sells Gmail to businesses with more than 10 users for $50 per user per year. Microsoft says Office 365 subscriptions start at $6 per user per month.

Microsoft and Google have been hitting the government and education sectors particularly. Google has won the city of Los Angeles. Microsoft has won the city of New York and San Francisco. Google complained to a federal court after the U.S. Department of Interior chose Microsoft over Google, forcing the department to re-examine its choice. The two have also bickered publicly over a security certification known as FISMA, or the Federal Information Security Management Act, with Microsoft claiming that Google lied about it, and Google denying the claim.

Four campuses in Nebraska's university system will start using Exchange email service and Lync instant messaging this year. Both are part of Microsoft's cloud subscription Office 365, which the company began selling on June 28.

University of Nebraska Medical Center will not be moving to Office 365 because of concerns that the hospital would not be able to comply with federal privacy laws around medical information, also known as HIPAA, or Health Insurance Portability and Accountability Act.

Weir described faculty and staff reaction to the news of the switch as "ecstatic."

Information in this article, originally published July 8, 2011, was corrected July 11, 2011. A previous version of this story incorrectly stated that Office 365 service starts at a price of $6 per user per year. Prices start at $6 per user per month.

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