If you haven't read CIO.com's account of Microsoft's frantic attempts to keep Procter and Gamble from using Google Apps, read it now. As I reported last year, I've personally seen very large companies kicking off large pilots of Google Apps to wean themselves off Microsoft, but I've yet to see such a dramatic response from Microsoft.
Microsoft is blase about Google Apps in public, just as it used to be about open source, but incidents like P&G are making the software giant realize that it has a serious problem on its hands.
Microsoft saved the day at P&G by shipping COO Kevin Turner out to P&G headquarters to arm-wrestle its CIO into signing a long-term contract with Microsoft. P&G likely got a hefty discount to keep the faith, but at some point Microsoft is going to have to start competing with products again, not merely prices. Its profitability and growth will flounder if it doesn't.