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2/21/2007
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Google Targets Microsoft With Launch Of Business Applications

The search engine company adopts a subscription model with its corporate bundle to counter Microsoft Office and Windows Live.

Having won over millions of consumers with its online search and productivity tools, Google is now looking to displace Microsoft as the desktop application provider of choice in corporate America by offering a range of low-cost, zero maintenance software that office workers can access through the Internet.

Google Apps Premier Edition, to be unveiled Thursday, features online e-mail, calendaring, messaging, and talk applications, as well as a word processor and a spreadsheet. The launch follows Google's introduction of a similar suite aimed at consumers last August. The new Premier Edition, however, offers enhancements aimed squarely at corporate environments.

"Businesses are looking for applications that are simple and intuitive for employees, but also offer security, reliability, and manageability," said Dave Girouard, VP and general manager for Google Enterprise, in a statement.

Specifically, Google Apps Premier Edition features application programming interfaces that businesses can use to integrate it with their own applications. Ten Gbytes of storage for ad-free Gmail is offered as a standard feature, meaning workers can spend more time working and less time cleaning out their in-boxes. And Google is offering service level agreements that promise 99.9% uptime and 24-by-7 tech support.

But possibly the most compelling aspect of Google Apps -- at least from the standpoint of potential customers considering a switch from Microsoft products -- is the price. Google is offering the whole package for just $50 per user, per year. Microsoft doesn't publish volume licensing prices for the Enterprise Edition of Office 2007, its latest entry in the office productivity market. The price of a standalone copy of the Professional Edition is $499.

Some analysts believe Google Apps could save businesses hundreds of thousands of dollars per year in IT support and personnel costs alone. "You could buy 1,600 Google Apps licenses for the cost of one IT worker," said Nucleus Research analyst Rebecca Wettemann, who notes that because Google Apps is Web-based it greatly reduces the need for deskside support.

But it's not just penny-pinching small businesses that are eyeing Google Apps. Business powerhouses General Electric Co. and Procter & Gamble are among the early adopters. For GE, it's less about the cost and more about "the easy access that [Google Apps] provides to a suite of Web applications," said GE chief technology officer Gregory Simpson, in a statement.

Nucleus analyst Wettemann cautioned, however, that a Web-based architecture may not work for companies in some highly regulated industries that require businesses to maintain tight control over their data. "It might be an issue in health care," she said, referring to the Health Insurance Portability and Accountability Act. HIPAA imposes strict data protection rules on health care providers.

Other analysts note that Google Apps doesn't offer as complete a productivity environment as does Microsoft Office. "The most notable gap is that there is no presentation tool," said Jim Murphy, of AMR Research. He also says Google Apps offers "only limited contact management capabilities."

Microsoft is responding to Google's online push with a Web strategy of its own called Windows Live. Windows Live also features a slew of Web-based productivity tools, but Wettemann said Microsoft "has yet to make clear to the business audience what it is doing with Windows Live. Until then, companies aren't going to look seriously at that."

Microsoft officials weren't immediately available for comment.

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