Technology companies are generally quick to publicly announce and highlight their customer wins. But in what strikes me as a first, Novell has publicized a customer loss, announcing to the world that the City of Los Angeles dropped it for Google Apps, including Gmail, Google Calendar, and Google Docs.
Google recently announced the City of Los Angeles as its latest high-profile customer win for Google Apps, one that reflects growing momentum for the cloud-computing giant's enterprise business. Until Novell's announcement, I had no idea that Los Angeles had dumped Novell GroupWise in favor of Google Apps, and suspect few others did, either.
Novell, however, attacks Los Angeles' decision, arguing "The City of Los Angeles should have opted for this proven product [GroupWise] to ensure the security of its data and to save taxpayer money. They have taken a risk with no reward."
Translation? "We think Los Angeles is run by a bunch of fools who aren't smart enough to know what's good for them."
This is no way to treat customers.
It's not made any better with this throwaway line: "However, as a valued customer, Novell will continue to offer our world-class support to the City of Los Angeles during the transition."
Well, that's comforting, but given that it comes at the tail end of Novell publicly excoriating its "valued customer," it's doubtful that LA will linger long with such a "valued vendor."
This isn't the Novell that I know. I used to work for Novell, and have never seen the company publicly criticize a customer, not even for defection, of which Novell has seen plenty over the last decade.
It's unclear who Novell is hoping to persuade with the announcement, or what benefit it hopes to derive from it. Is it trying to stem a tide of customers dropping GroupWise for Google Mail? If so, why has it not done the same for all the companies (and there have been plenty) leaving GroupWise for Microsoft Exchange or IBM Notes/Domino?
In fact, the only companies that benefit from this kind of customer abuse are IBM and Microsoft, because Novell slams Google Mail's alleged security and cost deficiencies, without them having to sully their hands with the negative marketing. It certainly won't endear Novell to the City of Los Angeles or to its other customers.
There's a big disconnect between what the media likes to write about and what the enterprise likes to buy. I suspect this is largely because the future is a much more interesting topic. Enterprise software might be a great topic for advertisers for Lunesta or Ambien, but it's woefully dull for everyone else.
So, the media talks about PHP and other Web-scripting languages, but stodgy chief information officers continue to buy Java and .Net.
The money is still in on-premise software for Microsoft and others.
And while cloud computing is one of the hottest topics in technology media, the vast majority of IT decisions center on which on-premise software solution to buy.
This is Microsoft's big problem ("We're not sexy! We're addicted to on-premises software!"), as well as its opportunity ("We're not sexy! We're safe!"). Microsoft makes great enterprise software. No, it's not perfect. But Microsoft more than any other company has made great strides to lower the cost of computing for enterprises.
Microsoft is now getting squeezed by open source, but I suspect it would rather compete against Google Apps than open-source software, because Microsoft has one huge advantage over Google, one that Microsoft doesn't have over open source:
Data security.
Google has gone on an advertising blitz to knock off Microsoft Office, as CNET reports, but it faces an uphill battle because the heart of enterprise computing is security. Security is boring, yes, but as ZDNet's Larry Dignan writes, "If you're in a heavily regulated industry you're not going to be e-mailing Google's help desk trying to track a 2006 e-mail to satisfy a Sarbanes-Oxley requirement."
It's possible that this is just a transitory issue that will dissipate with time as the benefits of cloud computing (fungibility of the computing experience with data following users from device to device) overcome its perceived shortcomings.
Google CEO Eric Schmidt told the San Jose Mercury News that Google has not traditionally had much collaboration with Microsoft, but perhaps it would do well to figure out how to tie Google cloud offerings into Microsoft on-premise solutions, as it's starting to do with its Gmail service that ties into an Outlook front end.
The reality is that Google and Microsoft may have more to gain from stasis in the near term than disrupting each other's businesses.
Regardless, in the short term, no matter how much the media and Google sell the cloud, it remains an add-on to corporate computing, not a replacement strategy.
I'm a believer in the cloud, as there's plenty of evidence that it's growing. But I think Microsoft has near-term threats like open source, and longer-term threats, like Google's cloud strategy.
Google is a threat. But Microsoft has time to improve its Azure story (cloud plus on-premise computing) before it hits the panic button.
Follow me on Twitter @mjasay.
If you haven't read CIO.com's account of Microsoft's frantic attempts to keep Procter and Gamble from using Google Apps, read it now. As I reported last year, I've personally seen very large companies kicking off large pilots of Google Apps to wean themselves off Microsoft, but I've yet to see such a dramatic response from Microsoft.
Microsoft is blase about Google Apps in public, just as it used to be about open source, but incidents like P&G are making the software giant realize that it has a serious problem on its hands.
Microsoft saved the day at P&G by shipping COO Kevin Turner out to P&G headquarters to arm-wrestle its CIO into signing a long-term contract with Microsoft. P&G likely got a hefty discount to keep the faith, but at some point Microsoft is going to have to start competing with products again, not merely prices. Its profitability and growth will flounder if it doesn't.
...Today I saw something that should petrify Microsoft. I was visiting a large financial services company and couldn't help but notice Google Apps running throughout the floor as we strolled past. It turns out that the company is actively rolling out Google Apps because it figures the vast majority of its users have almost no need for full Microsoft Office functionality.
This was long the premise behind why enterprises would switch to OpenOffice, but I suspect that OpenOffice wasn't disruptive enough. It's not purely a question of license cost: It's also a question of training and deployment costs.
With Google Apps, the end-users are largely driving the change themselves. They want the change, because they're already using Google Apps (Gmail, Docs, Calendar) at home. Having these at the office is a welcome surprise, rather than an unpleasant surprise foisted on them by the IT department.
So, while the competition between Google and Microsoft might not be zero sum, Microsoft has a lot more to lose from the duel than Google does, which has seen Microsoft barely ripple the surface of its advertising hegemony despite a concerted effort to create waves. Google hasn't hurt Microsoft, either, but then, it hasn't really tried.
Yet.
Google's AppEngine looks great. It's a way to build web applications and run them on Google's "cloud" infrastructure.
The downside? Your applications effectively become Google's applications because there's no easy way to move them elsewhere. You have to run them using Google's authentication engine, framework, file system, APIs, etc. Free as in Google's.
Enter Morph Labs.
[Morph] claims to have done all the back-end cutwork to make it easy for developers to get their software up and running as a service on Amazon's Web Services (AWS), freeing them from Google's Microsoft-like vendor lock-in....
... Read more
I've had a few conversations with IT executives from Fortune 500 companies in the past several weeks, and I've been surprised by how often a new enterprise-software company kept getting mentioned. The company?
Google.
Google has the problem of putting finish on a lot of its products, leaving things in eternal beta, but the price point for Google Apps is forcing even the biggest of companies to seriously consider Google instead of a Microsoft Office 2007 upgrade. (Google Apps: It's not just small customers anymore.)
We may be getting to the point where Google's "cloud" allows them to provision users so much cheaper than any given enterprise can that it will become the provider of choice.
In the case of one large company, it suggested that it costs them $200/user/year to provision their users with the kind of functionality that Google can provide for $50/user/year. They just can't "compete" with that.
So they're considering Google Apps. Tie goes to the company with the most scale? And isn't it odd that Microsoft is no longer necessarily the vendor providing that scale?
Slashdot has this note suggesting that the UK Internet Service Provider, Sky, is having trouble migrating its users to Google Apps. Reading through the commentary, however, it seems like the real problem stems from poor user documentation, and not technology, per se:
Rupert Murdoch-owned British ISP Sky is migrating their customers to the Google Apps platform, and the customer experience is terrible. Their 1 million customers were told that they need to change their client settings to enable SMTP Authentication and other settings on a certain date ? but not to do it before then or their e-mail would break; but if you don't do it on the date your e-mail will also break. Oh, and if you're a POP user you also need to enable that manually in the 'Skoogle' interface, as seemingly they chose not to run a system-wide command to allow it for all users. In addition, if you want help then you're pretty much on your own.
Bad? Yes. But could much of it have been alleviated by better documentation/a cleaner transition guide? Probably. The fault seems to be less with Google than with Sky.
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