Eye on Microsoft
About this Blog:
This is Shane O'Neill's blog about Microsoft's corporate strategy and its various software and services — the good, the bad and the ugly.
Google Apps Face Long Road Against MS Office in the Enterprise
Google Apps are slowly being invited to the enterprise dance, but won't be snagging Office market share anytime soon.
The competition between Google and Microsoft gets more intense and complex everyday. In one segment Microsoft will be the underdog; in another it's Google who's the new kid in town.
While Microsoft's Bing faces an uphill climb to catch Google search, it's even worse for Google Apps against the deeply entrenched Microsoft Office in the business productivity apps space.
Not that Google Apps don't make a lot of sense. You'd have to be crazy at this point to question the value of SAAS (software as a service) and Web-based apps. When you can't do your job because a server crashes, cutting off access to Outlook e-mail and other important business apps, the idea of having all your company's apps easily accessible on the Web becomes very enticing.
Still, most enterprises are not enticed. The prospect of storing proprietary documents on some one else's servers is daunting. Google "Gears" is a service that provides offline access to Google's online apps, which will come in handy if there's an outage or a loss of Internet access. But still, important company documents will still live on Google's servers, and that's a major security sticking point for businesses that won't go away anytime soon.
On top of that, so many businesses run Microsoft Office and like it that way (big companies switch technologies with all the swiftness of a herd of turtles). In a recent Forrester survey of 152 IT decision-makers at companies of all sizes, nearly 92 percent are supporting either Office 2007 or Office 2003 or earlier. Only 3.3 percent use Google Apps.
Office is a primary source of Microsoft's revenue, and is forecasted to generate $20 billion in revenue this year. And with a free, lightweight online version of Office, called Office Web Apps, arriving with the release of Office 2010 next year, Microsoft will have a direct Google Apps competitor that is also a proven brand in the enterprise.
Though Google claims 1.75 million businesses use Google Apps, there is no significant movement to Web-based business apps in the enterprise. But Google is hellbent on changing that. A month ago, it made significant updates to Google Apps premier edition, an enhanced version of the service that businesses may purchase for $50 per user per year.
In addition, Google has started a billboard ad campaign in four major cities aimed at encouraging commuters/business users to switch to Google Apps. The wording of the text-only ads will change every day in August. Some examples: "Ah. 'Going Google' means switching to Google Apps" and "Email, shared docs, and team sites? Nice. I want to go Google."
These ads are a subliminal blip and don't really say much, but could still plant a seed in an IT manager's head as he drives to and from work.
It's worth noting that business productivity apps are really not important to Google financially. Google's sales of Google Apps in 2009 will not even be 1 percent of the company's total sales.
But it's not about the money. Google Apps are an essential part of the company's long-term strategy against Microsoft. Office generates billions of dollars for Redmond, which it can use in other areas like, oh I don't know, um, maybe something called SEARCH. So Google must do all it can to reduce how much Microsoft profits from Office. The fact that Microsoft is releasing a free, online version of Office proves that Google's strategy is working. How exactly will Office Web Apps make money for Microsoft? Anyone? Anyone?
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