Google Getting Serious About Taking On Microsoft In Enterprise

Monday's Postini acquisition raises the issue of how serious Google (GOOG) is on its efforts aimed at the enterprise market. I think there is more to come.

So far, Google is almost entirely about the consumer market (if consumer and professional users can be separated at all), with advertisers to pay for it. 'Licensing & Other Revenue' was just 1.0% of total revenues in Q1 of 2007. Now, Google appears to be beefing up this tiny part of its business model.

Ultimately, the advertising market will prove to be a cyclical market, so why not do a little diversification while growth is still double digit? In Q1 of 2007, revenue growth was still around the 65% level and personnel numbers grew 80% year over year. Obviously, this reminds us of Yahoo! and its diversification efforts several years ago.

The licensing and other revenues stem from the Google Search Appliance sale and licensing of for-pay applications (applications that are free as long as they are not used in a commercial way, such as SketchUp and Earth).

Recent developments in this space include:

* February 22: launches Google Apps Premiere Edition (50 $/year/user)
* April 19: acquisition of Marratech (video conferencing software)
* May 18: launches Google Apps Partner Edition (for ISPs)
* May 30: launches Google Gears (offline application of Gmail, Docs & Spreadsheets, etc.)
* June 20: plans slide presentations addition to Apps
* June 27: additions to Docs & Spreadsheets (folders, etc.)
* June 27: teams with Ingram Marshall (Search Appliance distribution)
* July 9: acquisition of Postini (adds security and compliance solutions to Google Apps)

Conclusions:

* First, competition with Microsoft is intensified, especially from the ever increasing Google Apps suite and the addition of both Gears and Postini.
* I suppose a major sales push of the for-pay services must be on the horizon, mirroring the Ingram Marshall deal for the Search Appliance.

Comments

[steve.barnett]

A pretty smart play that will leave the rest of the industry wondering...

Google are acquiring the US market leader, a free cash flow, a global brand, a compliance solution for their online service and some of the worlds largest corporates as customers.

Since the announcement of Google mail for business we have seen quite a take up amongst smaller companies, but a poor showing for the more lucrative mid and upper mid markets.
Those who need to be particularly compliance aware.

Free data available at the BackChannel blogspot shows Microsoft making a strong
play amongst the larger corporates. As yet no sign of Google playing at this level but with Postini solving the compliance issues.

We see Google becoming a strong force in the amongst the medium and larger businesses.

[Swampthing]

Google or Microsoft needs a mobile application called 'qode'. The mobile web user / consumer needs a product that offers one click to the physical world around us.

One click on the barcode, logo, trademark, slogan, RFID, keyword, and be directed to who new mobile world instantly.

Turn on a product for information, coupons, tickets, schedules, and one consumers have the next internet of things to navigate.