I’ve been reading about the impact of Google’s purchase of Motorola Mobility, and it got me thinking: Where are Google’s investments in their enterprise applications? Obviously, I follow Google closely, and whether it’s their financials or company priorities, they say surprisingly little about their enterprise business. Google Apps seem to be a distraction inside the halls of Google because:
1) Google’s focus is on search and ads.
I don’t blame them. 97% of their revenues come from one thing: ads. They make $310 million in the “Other” category in which they report Google Apps revenues and Google Apps is just a portion of the 3% from “Other” revenues. (Google’s Q2 2011 earnings, slide 3)
2) Their Google Apps revenues appear to be stagnant.
Despite trumpeting millions ‘going Google’, their “Other” revenue has barely budged over the last year and a half. (Google’s Q2 2011 earnings, slide 3)
3) No one is replacing Office with Google Apps, not even Google.
Go to their job site & search PowerPoint or Excel. Applying to Google? Make sure you have great Microsoft Office skills. In addition to Google, 9 in 10 supposedly ‘Gone Google’ customers surveyed, are also Office users.
No wonder. After five years in the market, they have 1% market share to show for it. Clearly, Google has bigger fish to fry (Facebook and Apple), and if they killed Google Apps tomorrow, Wall Street would likely cheer the increased focus.
At Microsoft, productivity solutions are critical to our business, and this is what we do all day, every day in the Office Division.
But Google’s challenges go beyond mere focus. . .
1) Google’s DNA is at odds with enterprise productivity solutions. Productivity applications are in our DNA.
Given their advertising focus, Google doesn’t seem to understand why businesses need things like a product roadmap, a predictable release cadence, consistent APIs, and offline access to information. And, they’ve continued to fail to deliver them.
2) Their business model is at odds with user privacy. Our business model supports user privacy.
Google makes billions selling advertising based on personal data. Whether it’s ads on their search page, alongside your Gmail messages or on an Android phone, they don’t make a penny until you click an ad, which is targeted based on your personal information. This is fundamentally at odds with user privacy – a concept that is absolutely core to businesses, personal productivity and team collaboration. Eric Schmidt summarized it best when he said: “Google’s policy is to get right up to the creepy line and not cross it.”
3) They were “Born on the Web”. We build for the real world.
The Web is amazing, but it’s part of a bigger picture. Google’s Web bias emerges as a set of decisions that ignore real world customer needs. Try deploying Google Apps in an organization with a cross-section of real people, including those who are visually or hearing impaired. Or try using it somewhere with a spotty or non-existent internet connection. While Google builds apps for people like themselves, we build for regular people.
The public meme today is that Google presents an ever-present danger to Microsoft’s enterprise business. We’ve seen variations on this story for the last five years about Google and others:
- “Google Apps prepares to challenge Microsoft Office,” The Guardian, July 2007
- “Google Sites: A Sharepoint Killer?,” ZDNet, February 2008
- “Google Apps’ challenge to Microsoft Office,” Computer Weekly, April 2008
- “Exchange Market Vulnerability Starts With Outlook,” Gartner, March 2009 (subscription required)
- “Cisco Challenges Microsoft in Email with PostPath Acquisition,” Gartner, November 2009
What has actually happened over those five years?
- Office 2010 became the fastest selling version of Office … ever.
- Exchange grew to 73% of the market for business e-mail.
- SharePoint continued its meteoric growth past the $1B mark.
- Both BPOS & Office 365 launched and quickly won customers ranging from 20% of the Fortune 500 to tens of thousands of small and mid-size businesses.
- Google gained 1% of the market for business e-mail.
- Cisco exited the market for e-mail.
I’m sure we’ll continue to hear more of the same speculation. We have been counted out before, but history has shown how our commitment, experience and focus will deliver results. We will keep working with our customers, keep our priorities straight and keep investing in productivity and collaboration solutions.