Google makes its business apps move on Microsoft

By Stuart Lauchlan, news and analysis editor

Here they come! Google is to begin selling an online suite of business applications that takes it into a head-on collision with Microsoft. Google is positioning its Apps Premier Edition as a low-cost alternative to Microsoft's Office, which has about 450 million users. Google's software bundle, to be sold for a $50 annual fee per user.

Google has been offering a free version of its online software suite called Google Apps for six months. More than 100,000 small businesses and hundreds of universities nationwide are using the free service.

The fee-based version, Google Apps Premier Edition, includes five times as much e-mail storage as well as a guarantee that all services will be available 99.9 percent of the time with round-the-clock technical support.

"With Google Apps, our customers can tap into technology and innovation at a fraction of the cost of traditional installed solutions," says Dave Girouard, vice president and general manager of Google's enterprise division.

Google’s push could be problematic for Microsoft. "Bill Gates' greatest fear has always been the next Bill Gates. Google's Larry Page and Sergey Brin may very well have turned that fear into reality," suggests Zeus Karravala, senior vice president at research firm Yankee Group.

“The timing is right, especially with companies facing huge upgrade tasks associated with Microsoft—not just the software upgrades in Office 2007 and Windows Vista, but the possible integration costs and hardware costs that they might entail,” says AMR Research’s Jim Murphy. “The success of Salesforce.com is also breeding comfort and confidence with software-as-a-service (SaaS) deployment and costing models.

“Yet Google Apps is not the immediate alternative to Microsoft Office that many have anticipated. At the start, it doesn’t aspire to be. Google Enterprise’s initial targets are not current Microsoft Office or IBM Lotus Notes users. Rather, Google is after the 48 percent of enterprise workers without company-funded groupware suites. It’s the workers on the outskirts, such as retail employees, field service personnel, and plant floor workers, that represent the bulk of the workforce in many industries.”

But Murphy is not ready to predict that Google would have an easy ride. “This is neither earth-shattering news (since everyone and their mother has been anticipating it) nor completely innovative, either from a technology or a business model standpoint. And we doubt that the new offering, in its current form, will have immediate material impact on large enterprise decisions, where rarely do they consider equipping their broader workforce with enterprise-sanctioned e-mail and groupware.

“Moreover, Google will have to continue to battle security and privacy uncertainty (warranted or not), where many enterprises are locking down public e-mail and IM clients, bringing collaboration behind the firewall in order to better secure their intellectual property, ensure compliance, manage records, and accommodate new clarity on legal discovery requirements. The fact that four of the five applications in the suite retain the 'beta' label, even considering Google’s accustomed practice of perpetual beta in the consumer world, won’t quite instill confidence in CIOs.”

Beyond Microsoft, could Google ever pose a significant threat to the likes of Oracle and SAP? “The new enterprise UI is the battleground where Google will eventually compete with Microsoft, IBM, Oracle, and SAP,” argues Murphy. “All of them are intensely motivated to capture and retain the attention of more enterprise end users: SAP with its Enterprise Portal, Project Muse and the joint Duet product with Microsoft; Oracle with WebCenter; IBM with the now combined WebSphere Portal and Lotus Workplace technologies; and Microsoft with SharePoint, its more general offering of Office 2007 as a platform and very possibly Microsoft Office Live.

“Moreover, the UI has already begun breaking free of the browser, extending beyond the traditional website notion of portal and into a more pervasive presence, serving as an entry point to enterprise information, processes, and people via whatever mechanism, device, or application is available to them. Competition for more enterprise 'seats' hinges on the vendors’ ability to reach users when they’re not sitting in them. In other words, think VoIP and mobile.”

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