Game-Changing at Google

Feb.11.08 | About: Alphabet Inc. (GOOG)

Google made two announcements last week which received limited attention because they had been anticipated for some time. Nonetheless, these two new offerings will still have an impact on the Software-as-a-Service [SaaS] and managed services markets.


Google's first announcement unveiled a series of security "products" based on the email message filtering, encryption and archiving capabilities Google acquired when it purchased Postini. Although Google refers to these offerings as products, they are being sold on a subscription service direct to customers or via channel partners who can package these capabilities into managed services.

Google's objective when it acquired Postini was to fortify its messaging and archival capabilities so it could appeal to a broader cross-section of business customers, especially large-scale, publicly traded enterprises who are facing stricter compliance requirements. Google's new Message Filtering, Security and Discovery offerings provide a solid, yet simple and economical solution to respond to these demands. Anyone who doubts the scalability of these capabilities should note that Postini's solutions are already being used by nearly 40,000 customers and 14 million users a day.

These new offerings represent a double-edge sword for managed service providers [MSPs]. Google's growing role in the delivery of managed security services helps to validate this business and should expand the market opportunity. But, it also raises the bar by lowering the price points for these services. MSPs must demonstrate how they add value if they are going to compete against Google's lower cost services.


Google also unveiled its new Apps Team Edition for business customers and schools. This new suite of free applications are clearly aimed at dislodging Microsoft Office as the de facto standard for business solutions. Not only is Google challenging one of Microsoft's cash-cows from an economic standpoint with its free offerings, it is also challenging Microsoft Office by emphasizing the greater collaborative qualities of its web-based apps.


Google has also borrowed a best practice from Apple and other technology leaders who have learned that the best way to win market share is by targeting customers when they are young. And, the best place to gain their attention is in the schools. It is no accident that Google emphasizes the benefits of Apps Team Edition for both business users and students in this week's announcement.


Google has also established a clear service roadmap that enables users of this new suite of free services to easily upgrade to Google Apps Standard, Premier or Education editions which include administrative controls for setting access and sharing options, business integration capabilities and 24/7 support, including phone support.

So, while Microsoft is seeking to usurp some of Google's power in the online search world with its proposed acquisition of Yahoo!, Google is escalating its efforts to undercut Microsoft's dominance in the productivity software market.

Rather than view this escalating battle as a parlor game, aspiring SaaS vendors and MSPs as well as IT/business decision-makers should pay attention to how Google and Microsoft's moves are reshaping the software and services markets. There are many lessons to be learned from their maneuvers and new market/sourcing opportunities that can be capitalized upon.