August 27th, 2006

When Will Google Be Honest About Its Enterprise Ambitions?

by

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.

UPDATE

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.

Comments (17 Responses so far)

  1. whole debate back on 2004, April 1, when Gmail was released. The offer includes IM, mail, web pages and a calendar – the startups toolkit (if we count the Gspreadsheet and writely as well). On the other hand it is true that this gives plenty of room for going after the bigger enterprise clients, though the model is not clear yet (licences versus advertising – perhaps a combination of the two)

  2. 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. Publishing 2.0 ‘Occasionally connected': not good! Another article from ZD Net: Computing is about using standalone smart devices (PC’s, PDA’s, cellphones today and intelligent peripherals – smartTV, media centers, home appliances, etc. tomorrow) which are

  3. hosted Windows Live applications. “But, there is disruption in the air, and the Microsoft Office monopoly is definitely going to face a major competitive threat in the near future,” he said. Read/Write Web offers up a nice list of Office alternatives. Scott Karp doesn’t buy into the idea Google is not aiming to butt heads with Microsoft. “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.

  4. que está ultimando el desarrollo de sus nuevos Office y Office Live. También lo comentan el WSJ ($) en ” Google bundles package of tools for Business, Education markets “, TechCrunch en ” Google makes its move: Office 2.0 “, Publishing 2.0 en “When Will Google Be Honest About Its Enterprise Ambitions?”, y un muy receloso Om Malik en “Google Apps for my domain: no, thank you”, donde resalta lo que sin duda va a ser el principal tema a discutir para mucha gente: las cláusulas de privacidad de Google aplicadas a la información que manejan las

  5. (1 day ago)Publishing 2.0: “When Will Google Be Honest About Its Enterprise Ambitions?” (1 day ago)

  6. in the blogosphere and tech-o-sphere is this morning. Here’s a hint: It starts with the word Google, and ends with the word Office. I’ll say one thing — like my friend Scott Karp at Publishing 2.0, I wish the search company would stop protesting about how it isn’t really competing with Microsoft, and just cut to the chase and say “Game on.” Despite what the online Office skeptics say (and Kent Newsome has a point about large-scale corporate use of such apps), the future of applications

  7. telecomunicación y telefonía, ecomercio, editoriales de libros y contenidos audiovisuales? ¿Cuál será la posición de los otros “grandes”: Microsoft, Yahoo, myspace, etc, para no ser engullidos por el Pacman Google? ¿Es esta una nueva burbuja como la dot.com del 2002? (Aquí resultados económicos y cotización actual de google); ¿Caerá con estruendo de chatarra como ocurrió en el pasado?, ¿Hasta donde se “compran” realidades y no sueños o nubes

  8. telecomunicación y telefonía, ecomercio, editoriales de libros y contenidos audiovisuales? ¿Cuál será la posición de los otros “grandes”: Microsoft, Yahoo, myspace, etc, para no ser engullidos por el Pacman Google? ¿Es esta una nueva burbuja como la dot.com del 2002? (Aquí resultados económicos y cotización actual de google); ¿Caerá con estruendo de chatarra como ocurrió en el pasado?, ¿Hasta donde se “compran” realidades y no sueños o nubes

  9. Scott,

    In the the mid and late nineties — when I was analyzing Media Metrix data — I could never figure out why so many PC apps (connected or not) never exploited themselves as media, or advertising vehicles. We were tracking time, attention and focus to various components of the PC, whether it be a word processing program, game or Web browser with the ensuing clickstream — passive or active. (Btw, I’m long gone from Media Metrix.)

    Of course, some of the exceptions were apps like AIM, weatherbug and some games among others. In fact, Media Metrix pretty much dropped the app-usage measurement business because there was never much demand for it. App manufacturers were very interested in sales and licenses, but not actual usage or attention. Only publisher-oriented businesses wanted to know the usage, reach and time stats. No clients in apps, no support for the measurement. I always thought it was important because ads or no ads, it’s important to understand all the nuances and focus of attention within the entire context of the PC environment. We did keep some aspects of the app measurement alive, including for the ad-supported instances mentioned above, as well as file-sharing services.

    Perhaps Google’s move into the enterprise will reveal long-hidden nuances to help explain why desktop apps, with few exceptions, never became ad vehicles. While I hate ads, it would seem to me that apps are game as fair as any other. Of course, there are numerous adware and spyware embedded in various utility apps (usually “free”), but I consider those illegitimate and totally evil.

    Max

  10. [...] Scott Karp thinks that Google is gunning directly for Microsoft’s enterprise business, and Kent Newsome suggests that Google will not crack corporate America any time soon, but can make inroads from the bottom up: As I have said many times, corporate America is not going to embrace online applications and storage for a long time- privacy, security, fear of a bad decision, and confidentiality requirements ensure that. But the more individuals and small businesses that opt for Google’s free alternatives, the bigger Google’s toehold is- both in the office productivity space and in connection with its master plan to be the keeper of all of our data. [...]

  11. Hmmm. I guess I spoke too soon a couple of weeks ago when I said at least Google didn’t have the benefit of Microsoft’s lockin feature. I tend to think the ZDNet trackback above this comment may be on to something — isn’t Google short term just trying to lock down the masses and avoid being AltaVista’d?

  12. And by masses I mean micro and small busineses, not larger companies. That was actually Kent Newsome’s take.

  13. 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.

  14. 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…

  15. 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.

  16. >>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.

  17. [...] After much braying from the sidelines, Google watchers are finally getting what they wanted with the launch of an Web-based productivity suite. According to InformationWeek, Google will unveil Google Apps, which will feature e-mail, calendar, instant messaging and Web site creation services. Later this year, it will also include word processing (Writely), spreadsheet and collaboration features, and start selling the package for a fee to corporate users. Apparently, Google doesn’t want to go head to head with Microsoft. Instead – and I find this difficult to believe – little, old Google wants to grab foothold with corporate users by offering tools so that people can open Office documents shared on the Web. That does not seem to make much sense given most corporate computers have Office installed. You have to believe Google wants a chunk of the lucrative Office market that Microsoft has dominated for far too long. With broadband becoming more ubiquitous and Web-based services increasingly accepted, Google must see the multi-billion dollar productivity market as a natural vehicle to drive revenue beyond its Golden Goose, AdSense. Over time, I can easily see lots of people adopt Google Office as their primarily productivity suite given documents can be accessed from any computer connected to the Web. It will also help that it appears Google Apps will be free for individuals, and I suspect reasonably price for business users.   Reaction across the blogosphere as been refreshingly pragmatic.ZDNet’s Dan Farber said business users aren’t going to “defect” from Office or other products overnight, and that Microsoft is developing its own suite of hosted Windows Live applications. “But, there is disruption in the air, and the Microsoft Office monopoly is definitely going to face a major competitive threat in the near future,” he said. Read/Write Web offers up a nice list of Office alternatives. Scott Karp doesn’t buy into the idea Google is not aiming to butt heads with Microsoft. “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?”. Paul Kedrosky, who has tried and been impressed with Google Apps, said Google new suite is “mostly directed at people sending “Enterprise 2.0″ business plans my way: If you’re thinking of doing something squarely in Google’s enterprise-lusting aim you need to ask yourself one question only: Why? What makes you think that you can do it so much better than Google can that the inevitable free Google Apps product doesn’t kick your ass out of the office market?” It’s an interesting comment given his VC firm, Ventures West, recently made a first-round investment in DabbleDB, online spreadsheet service. [...]

  18. 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.

  19. [...] Publishing 2.0 Scott Karp on the Convergence of Media and Technology « When Will Google Be Honest About Its Enterprise Ambitions? | Home | [...]

  20. [...] Speaking of ZDNet, here is a summary of interesting opinions by leading analysts, such as Anil Dash, Kent Newsome, Nick Carr and Scott Karp – all on this very subject. A recommended read for the scene follower. [...]

Add Your Comment

Subscribe

Receive new posts by email