New York City Mayor Michael R. Bloomberg announced the deal at a press conference with Microsoft Chief Executive Steve Ballmer on Wednesday.

Under the five-year deal, 30,000 New York City employees will use Microsoft's Business Productivity Online Suite, which includes email and a collaboration product called SharePoint. Next year, users will migrate to Microsoft's new Office 365 product when it becomes available.

Announced on Tuesday, Office 365 builds on the Business Productivity Online Suite, but includes Microsoft's collection of productivity applications such as Word and Excel.

The news comes amid a broader trend to cloud computing, which consolidates computing power in data centers and uses the Internet to connect users to applications and data stored in those centers. It also comes as competition for cloud-based government contracts has increased between Microsoft and Google. Google's Office-like suite of online productivity applications, called Google Apps, competes with Microsoft's offering.

On Monday, Microsoft announced a contract to migrate more than 100 California state government email systems to the Business Productivity Online Suite and later to Office 365.

Valued at just under $20 million annually, the New York City contract will include upgrades to Windows 7, some server software and access to Azure, Microsoft's platform for cloud hosting and programming. The contract will also help New York trim its 50 data centers down to one, the city said.

Thanks in large part to contract consolidation and a tiered approach to which applications each employee will use, New York City expects the deal to save $50 million dollars over the next five years.

"We didn't even know how many total Microsoft agreements there were within the city," said Eddie Borges, a spokesman for New York City's Department of Information Technology and Telecommunications.

After it is launched next year, Office 365 will later be expanded to include access to Microsoft's Dynamics, a customer-relationship management program, Microsoft said. The Redmond, Wash.-based software giant also plans to debut a version of Office 365 targeted at education customers later next year.

By: DocMemory
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