August 27th, 2006

When Will Google Be Honest About Its Enterprise Ambitions?


Google has Microsoft squarely in its sights with the release of Google Apps for Your Domain — a bundling of Gmail and Google Talk, Calendar, and Page Creator for the enterprise, focused at this point on universities and small businesses. Here’s what jumped out at me from the press release:

Girouard underscored that the Google Apps platform is not designed to replace Microsoft’s core software. Many businesses are likely to run Windows and Office programs alongside Google Apps on office workers’ computers, he said.

“This platform isn’t by any means an alternative to Windows,” Girouard said. “We are not really out there to eliminate any applications. We are looking to introduce new ways to solve problems people have been having for years.”

Oh, please! Doesn’t Google know that some people consider disingenuousness to be quite “evil.” The same press release also mentions:

Later this year, Google said it will offer a “paid, premium” version with the option of being ad-free and more administrative control and compliance features to meet the demands of bigger corporations and government agencies. Pricing for this more advanced version is not yet available, it said.

Here’s Google CEO Eric Schmidt from his chart with Danny Sullivan at Search Engine Strategies San Jose:

What’s interesting [now] is that there is an emergent new model, and you all are here because you are part of that new model. I don’t think people have really understood how big this opportunity really is. It starts with the premise that the data services and architecture should be on servers. We call it cloud computing – they should be in a “cloud” somewhere. And that if you have the right kind of browser or the right kind of access, it doesn’t matter whether you have a PC or a Mac or a mobile phone or a BlackBerry or what have you – or new devices still to be developed – you can get access to the cloud. There are a number of companies that have benefited from that. Obviously, Google, Yahoo!, eBay, Amazon come to mind. The computation and the data and so forth are in the servers.

This is the same talk that I gave in this room 10 years ago about something they called the network computer – which, I can assure you, none of you are using, because it didn’t work. But in the last 10 years, technology and architecture, things called Ajax and something called LAMP, which is Linux, Apache, MySQL, PHP, PERL, Python, and all of these new platforms have come out. In looking at it, the analogous thing that happened to make this possible that I certainly didn’t see 10 years ago was the development of advertising in this new forum.

And so what’s interesting is that the two – “cloud computing and advertising – go hand-in-hand. There is a new business model that’s funding all of the software innovation to allow people to have platform choice, client choice, data architectures that are interesting, solutions that are new – and that’s being driven by advertising.

It’s so plainly obvious that Google wants to take over the enterprise software market from Microsoft and the rest of the old guard — the question is not IF but HOW, i.e. what’s the business model? Will Google use enterprise software as a Trojan horse for advertising inside the corporate firewall, or will they fall back on the old model of licensing fees?

Another pressing issue is how Google (and others in the Software as a Service game) will adapt their applications for offline use. I’d be willing to bet that when most Gmail users need to draft a message offline they use…MS Word. I just got back from a weekend on the Chesapeake Bay, and I can tell you that there wasn’t a hot spot for miles — accessing Web apps just wasn’t an option. And now that Boeing has infamously pulled the plug on its inflight Internet service, airline flights remain the great offline terrain that challenges SaaS to accommodate business travelers.

With Google’s black box obscuring its strategy as well as its data, I don’t expect them to lay out a road map for how they plan to win the enterprise software war. But at least they can be honest about their intentions.


Scoble points out that Google leaked the announcement to a couple of traditional news sources, but no bloggers — I saw the story on Reuters before the New York Times and InformationWeek stories were findable. Google probably knows that bloggers are more likely to take a harder look and not just swallow the PR feed. Sure enough, Om Malik calls fouls on Google’s privacy disclosure, and Kent Newsome doesn’t think Google has a chance to wrestle the enterprise away from Microsoft.

  • I think there's a difference between, "being honest" and being totally forthcoming about where they see their company heading in the future. Why boast about taking over the enterprise Office software business before you have the services in place to do it? And even the, what do you gain from selling hard versus letting people discover for themselves a new way of managing their work? However, the biggest challenge for Google is there is no guarantee that SaaS will generate the income and growth GOOG investors expect.

  • >>Most small businesses didn’t advertiser nationally until search marketing made it efficient to do so...

    That's a nice analogy, but I wonder if it will translate the same. Being able to cost-efficiently engage in targeted advertising was another one of those siren songs for the little guys. And even though I'm more comfortable with the idea compared to the average small business person, ditching MS Office for a web-based application just sounds like a hassle to me.

  • Liam, that's a sound argument -- although it cuts both ways. Most small businesses didn't advertiser nationally until search marketing made it efficient to do so -- and AdWords pretty much spread virally. So the lack of meaningful adoption curves of SaaS enterprise could mean they just haven't reached the tipping point yet. Didn't work in Web 1.0 has been used as a frequent argument for why something won't work in Web 2.0 -- as an argument, it only holds up on a case by case basis.

  • There's more to this story... web office apps apparently don't spread virally, unlike consumer web services. That's a problem, as IT depts aren't going to take the lead in pushing these solutions; they have to be driven by users. See the Web 2.5 blog (which was linked by Om) for more on this...

  • Max, software/technology as media is at the heart of Google's business innovation -- you're right that the opportunity has been there for years, and it took the information aggregation function of a search application to finally bridge the gap. But now that Google has crossed the river, the possibilities for software/technology as media are endless. That's why I reframed Publishing 2.0 as the convergence of media and technology -- software companies are the new publishing companies.

    Brian, I think you're right that Google is trying to lock-up it's half of the Microsoft-Google axis, as Nick Carr put it. Although they've had trouble translating their search brand strength into other applications, they have a huge advantage in trying to be a competing "household" name for enterprise software -- and small business is the right place for them to start, especially with the siren song of "free" applications.

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