By John Letzing 
 

Microsoft Corp. (MSFT) has won a software contract with a county in the heart of Silicon Valley home to Google Inc. (GOOG), further stirring the ongoing rivalry between leading technology companies.

While Google initially bid for the email and collaboration software contract with the county of Santa Clara, the county ultimately opted to focus only on technology from Seattle-based Microsoft--in order to keep costs low and remain compatible with the security requirements of law-enforcement agencies, according to county Chief Information Officer Joyce Wing.

The county has been using a mixture of email technologies from Microsoft and other firms, Ms. Wing said. It hopes to start moving to the new Microsoft technology in October, she said.

The contract covers 15,000 employees and is worth $3.6 million annually, though Ms. Wing says that figure may be reduced in the future.

She said she sees no irony in the county opting for technology from Microsoft rather than Google, which is headquartered in Mountain View, Calif.

"Google has a very good product," she said, but the county ultimately realized it would have to retain at least some Microsoft technology in order remain compatible with other government offices and law-enforcement agencies. "If I went the Google way I would've still had to pay for the Microsoft products as well, and that would've been additional costs," Ms. Wing said.

A Google spokesman said the company was ultimately unable to compete for the contract, after the county's focus shifted solely to Microsoft technology.

"We believe fair and open procurement processes save government agencies and taxpayers millions of dollars a year and result in better services," the spokesman said.

The tools to be made available in the County of Santa Clara include Microsoft's Office 365 software, an Internet-based version of its word processing and other products.

Google has promoted the use of Google Apps, a suite of Internet-based word processing and other tools. The company has touted a number of government agency customer wins for Google Apps, including the cities of Orlando and St. Louis, as well as the Department of the Interior and General Services Administration.

While Google has created increased competition, Microsoft is still able to rely on its Office software business as a growing source of profit.

For the quarter ended in June, Microsoft reported that operating income for the Business Division that includes Office rose to roughly $4.1 billion from $3.8 billion in the same period a year earlier.

Write to John Letzing at john.letzing@dowjones.com

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