It’s another major SaaS win in the education space for Microsoft as the Kentucky Department of Education (DOE) deploys Live@edu to over 700,000 students, faculty, and staff. Microsoft claims it’s the largest cloud date to deal in the United States. Plus it highlights intensifying Google vs. Microsoft SaaS competition in the education market. Here are the details.

The Kentucky DOE expects to save $6.3 million in operational costs over four years by moving to the cloud, according to Microsoft’s press release. For the uninitiated, Live@edu is a browser-based suite of productivity tools for educational institutions based on Microsoft’s most popular products, including a version of Exchange 2010 for messaging.

Even more notable than the size of the deal is how quickly they say Live@edu was able to be deployed: over half a million accounts were migrated from around 180 Microsoft Exchange Server 2003 on-premise servers to Live@edu over the course of a single weekend. That meant users experienced as close to zero service disruption as possible under the circumstances, Microsoft says.

This is the latest sign of intensifying SaaS and cloud competition between Google and Microsoft in the education market. It’s been a while since we heard of a Google deal even approaching the same number of seats, and now we have two major Microsoft education market wins in a very short span of time.

Despite Google’s PR campaign and thousands of college kids embracing Google Apps, Microsoft is still out there making waves. The company in May 2010 announced a major win with BPOS (Business Productivity Online Suite) at the University of Arizona.

The bigger question: Do these big university and K-12 SaaS wins involve and channel partners?

Additional reporting by Joe Panettieri. Sign up for MSPmentor’s weekly Enewsletter, Webcasts and Resource Center. And follow us via RSS; Facebook; Identi.ca; and Twitter. Plus, check out more MSP voices at www.MSPtweet.com.