Google is well known as a one-trick pony.
Almost all of the company's revenue comes from its search engine, which last quarter accounted for more than $5 billion. New initiatives, such as the Chrome browser, Google Gears, and Google Friend Connect, are focused on building a mostly open-source Internet operating system out of Google technology in order to funnel more user data and targeted advertising opportunities into the Googleplex financial engine.
It's easy to draw parallels to Microsoft, which gradually built the dominant 20th century operating system and applications platform. Bill Gates and company realized that attracting developers to the Windows platform was key. Google is following that advice with its open-source projects and allowing its mad scientists to try to remake the early 21st century software world and take on Microsoft.
Microsoft has led the way with productivity software, gaining a more than 90 percent share of market with Microsoft Office. Google is hoping to replicate Microsoft's office suite success with Google Apps. It's far less feature-rich than Microsoft Office, but Google Apps Premier edition is far cheaper at $50 per user per year.
For some companies, Google Apps is "good enough," and its cloud-based, collaborative core is an advantage--no Microsoft SharePoint server required. Even with a few enterprise wins, Google Apps is a puny business. According to a Fortune article, Google brought in about $4 million with its Google Apps business in 2007, compared with $12.2 billion for Microsoft Office. Google Apps is a profitable business, according to Matthew Glotzbach, enterprise product management director at Google.
Since early this year Google has been touting 500,000 active business customers, primarily small businesses, using at least one of the Google Apps, and more than 10 million active users. In addition, thousands of universities, with more than one million active users, are using Google Apps, the company said. So far, Google's biggest wins are Valeo, a leading automotive suppliers, with 32,000 users, and the District of Columbia, with 38,000 employees.
However, the vast majority of Google Apps users are not paying customers. The company maintains that "hundreds of thousands" of users are paying the $50 annual fee. The $50 per-user-per-year Premier Edition offers several features lacking in the free Standard Edition, including Postini messaging security, APIs for integrating Google Apps with IT infrastructure, 24x7 support, 99.9 percent uptime guarantee for e-mail, Google Video and 25GB of storage per account.
At this point, Google is underplaying the number of Google Apps business customers. The company has been saying that it is adding 3,000 businesses a day, which amounts to over 1 million per year. The reality today is that Google has more than a million Apps business customers. In addition, the Apps suite continues to fill out, most recently with Google Video.
It took Microsoft years to build a base of applications and developer ecosystem for Windows and Office. Google faces the same uphill climb for Apps and its fledgling Web operating system. The company hopes to ride on the backs of the younger generation that has grown up on the Web and identify with the Google brand. As the Google generation moves into positions of purchase authority within businesses, Google is betting that those decision makers will shun Microsoft, especially as Apps product features improve. Of course, the resilient and relentless Microsoft will respond to Google's challenge when it is more than a $4 million or even $20 million blip.
In a dinner theater setting at the Four Seasons in San Francisco, Salesforce.com's Marc Benioff and Google's Eric Schmidt officially rolled out Salesforce for Google Apps, the integration of Google Apps, Gmail, Calendar, and Google Talk with the Salesforce.com platform, in 15 languages.
Salesforce.com CEO Marc Benioff and Google chief Eric Schmidt.
(Credit: Dan Farber/ CNET News)Benioff said one of the goals is to "get rid of the albratross of IT."
Benioff also has referred to Microsoft as a kind of albatross, the old guard of software holding on to the client/server past. Previously, Benioff described Microsoft a dinosaur:I think Microsoft is still a dinosaur. More than ever, it tries to hold onto its monopolistic position around technology that they hold, whether it's SQL Server, whether it's NT, whether it's Windows, whether it's Office--these are their cash cows they don't want slaughtered.Benioff recognizes that to achieve success he must eventually replace, not just complement, the enterprise software giants. The alignment with Google is a direct shot at Microsoft, as well as Benioff opportunistically aligning his company with the current alpha company in Silicon Valley.
"Customers are demanding a new generation of software, and the standard bearers of the previous generation have not stepped forward," Benioff said during the rollout event. "The power will be to run your applications in the cloud," he proclaimed. Coincidentally, Microsoft is launching on Monday the first day of the free 30-day trial of Microsoft Dynamics CRM 4.
Schmidt also gave his take on the alliance of Google and Salesforce.com. "We know what it takes to build this next generation of services," he said. "You need a company with values," he said, citing the social responsibility leadership of Salesforce.com. Importantly, he said, Salesforce.com figured out the model for making money selling services from the cloud. "That model is the defining model of the new computing cloud age," he said, and it is "a 20- or 30- or 40-year vision."
"Although the two companies are working in the same space in different ways, the models are getting closer and closer. The clouds are beginning to merge," Schmidt said. Google has even changed its tag line to reflect its investment in applications, from search and ads to search, ads, and apps.
(Credit:
Google/Salesforce.com)
Now the question is whether enterprises will be attracted to the merged clouds. Salesforce.com is eating its own dog food, moving its entire company to Salesforce.com for Google Apps. It's a viable, and extremely low-cost, alternative to Microsoft Word, Outlook, Excel, and related products. Salesforce.com has integration with Microsoft Office, but no equivalent to Gtalk.
For customers who need offline capabilities, Salesforce.com provides support. Dave Girouard, general manager of Google Enterprise, said that Google is committed to making all of its apps available offline via Google Gears. (Google Docs currently has offline support.) "As the Internet becomes more persistent it becomes less of an issue," Benioff said.
According to Girouard, Google Apps, at $50 per user per year, has 10x better economics than a well-provisioned suite of Microsoft Office products, which would include some administrative support. Rebecca Wettemann of Nucleus Research told me that the difference between a Google and Microsoft solution on Salesforce.com differed by a couple orders of magnitude, and that the Salesforce.com alliance gives Google a sales channel. She also noted that companies should take a tiered approach; some users might need Excel and others could do fine with just the spreadsheet in Google Apps.
This locking of arms by Benioff and Schmidt should force Microsoft to show its hand sooner than later. On April 24 in San Francisco it plans to offer more details on its Live Mesh service, which reportedly synchronizes data between a variety of devices. That won't quell the call for a nearly free cloud-based, collaborative suite of applications as Salesforce for Google Apps gets some traction.
While Google receives lots of attention for its suite of Web applications, and Microsoft waits on the sidelines, Zoho continues to add new components to its Web suite.
The latest addition to the suite, which already includes modules for everything from documents and spreadsheets to CRM and wikis, is Zoho People, a human resource management application.
Zoho People, currently in beta, includes the usual HR functions for administrators and employees, with modules for organization, recruitment, forms, and checklists (work flow). In addition, Zoho Creator has been integrated within Zoho People, allowing users to customize the application.
Zoho People joins Zoho CRM, Zoho Meeting, Zoho Projects, and Zoho DB as part of the Zoho business applications suite.
Zoho is targeting businesses with more than 50 employees for the new product. Pricing is expected to be around $50 per month for administrators and $50 per year for employees, according to Raju Vegesna of Zoho.
Zoho could bump up against more established software-as-a-service HR offerings from well funded companies such as Workday, Taleo, NetSuite, SuccessFactors, and others.
But Zoho is likely to focus more on smaller businesses with its comprehensive set of browser-based productivity and business applications and viral marketing approach. In fact, Zoho is most concerned about setting itself apart from Google, which lacks the business applications. Google, as well as Microsoft, will be watching Zoho closely to see if it gains any traction with customers. If so, either one would be a candidate to acquire the Zoho, which is a subsidiary India-based of AdventNet.
See also a video about Zoho People, Zoli Erdos' post on Zoho People, and Larry Dignan's take.
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