We all know from experience … with Google Apps you can often have to add a lot of different third party appliances just to get to parity with the experience and then all of a sudden you've got lots of vendors to manage and all of a sudden it's very different to that low cost price point that Google initially positioned to the customer.
This is an old story; shades of every high-end vedor that's ever been wiped out by a low-cost player. As a hardware guy, it reminds me of the response you'd hear from POWER, PA-RISC, Alpha, SPARC, etc. vendors when you mentioned x86 workstations.
At the time, my response was, sure, maybe you've got a better product now, but what fundamental advantage do you have that keeps Intel from using their large, and growing, userbase and economies of scale to crush your R&D spending and pull ahead?
Software doesn't have such high fixed costs, and MS has a ton of money to spend on R&D. But, this still sounds like a lame defense.