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The two choices are in some ways similar, for example email is essentially email from a functional point, but in other ways the choice is between two quite different services. Google is much more of a true cloud based service, whereas Microsoft's suite is much more dependent on the use of (and installation and configuration of) local software. The University of Nebraska went with Office 365 almost immediately after the service was released, and they are still working on the migration. Even so, they expect the use of Office 365 to result in half a million dollars in savings per year once fully implemented. http://www.omaha.com/article/20111219/NEWS01/712199898
I do think Berkeley's decision will have some impact among universities, and perhaps some companies, but I don't really think that this is a huge coup for Google. Remember, just a few weeks ago, the LAPD made the opposite decision and decided against going with Google. They claimed security concerns because of the cloud based structure, which may or may not be valid, but I am certain that in every sales pitch by Google's competitors, they will point out again and again the security aspect of LAPD's decision. At the same time, I would expect Google to point out that they were the choice of UC Berkeley in sales pitches.