Interview: Google CEO Eric Schmidt Talks Business Technology - InformationWeek

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Interview: Google CEO Eric Schmidt Talks Business Technology

The strategy involves putting more of Google's Web site capabilities into low-cost appliances for the workplace.

Following the introduction of the Google Desktop Search for Enterprise software at the Gartner Symposium ITXpo in San Francisco on May 18, Google CEO Eric Schmidt sat down with InformationWeek's Thomas Claburn to discuss his view of the business-technology market and how Google might change it. Dave Girouard, general manager of Google's enterprise business, was there, too. The interview began with a question about IT productivity, following Schmidt's public comments earlier in the day about "end-user dissatisfaction with IT."

InformationWeek: Can IT continue to delivery productivity gains?

Schmidt: Let's imagine you're a CEO and you're running a sales force. How can you get your sales force to generate more revenue? Get them more educated, more trained, better tools, better multimedia tools, better account planning, better management—sort of CRM on steroids.

InformationWeek: The other day I was speaking with a company that was coming out with an application to improve the efficiency of sales lead generation using social networking. They made a good argument for it, but it seems there's a limit to the amount of productivity that can be gained—calls still take time—unless you're talking about automating the entire process.

Schmidt: The other question has to do with the evolution of sales models. Google has shown that a sales model that uses advertising that's search-based is the first place you should put your sales dollar, because the cost per revenue dollar is so low compared to the revenue dollar delivered, over and over again. That's why our model works so well. In other words, if you're a CEO and you have no sales force, the first thing you'll do is put dollars into Google. And by the way, you'll also put them into our competitors. Same argument. And then you'll say so I want even more revenue than I can get from that, then you would start thinking about a sales force. And that's very interesting because that wasn't true ten years ago.

InformationWeek: That does assume a competent sales campaign behind that.

Schmidt: That's what we do. We have a whole sales force to help people do that. If I were setting up a business today and I did not have a sales force, I would think long and hard. Before I would build a high-cost sales force, I'd build a low-cost distribution channel first, because everybody is under such margin pressure, and then I would figure out how to lay stuff on top of that. And that's new. That is different.

InformationWeek: How does the enterprise business fit into the Google puzzle, and are we going to see continued developments from Google in enterprise IT beyond search?

Schmidt: It turns out that one of the most bizarre things about this business is it's actually growing quite quickly and quite profitable, even after lowering the prices 40%. On a sale-in basis, the business is doing just fine. But that's not why we do it. If you think about it, the person who is ultimately the customer here is inside a company. On a general basis, they're more highly paid than the average customer. They do more searches. They're a better advertising target. It makes perfect sense to me that you should do this even if you were not making money—which is not the case. You would be willing to lose money in this business for the strategic leverage that it gets you to reach those customers. They are the power users.

InformationWeek: You've spoken about price and simplicity being two elements of your strategy --

Schmidt: As opposed to complexity --

InformationWeek: And expense, which sounds more like traditional IT.

Schmidt: Sorry (laughing), I didn't mean to be obnoxious. We're in favor of low prices. We're the deviant one.

InformationWeek: Why is it that the rest of the IT industry hasn't caught on to this?

Schmidt: I think we have some unfair advantages, if you will. We have scale effects. It's very, very difficult to build these things. There are hundreds of technical people who built this. They're just not part of [Google's enterprise group]. [Dave Girouard, general manager of Google's enterprise business] leverages all of that investment—he gets it for free. We don't charge him for all those people. If he were in charge of a startup, how would he get access to that [technology]? He'd have to build all that infrastructure. And even if he could, which would take a long time, he couldn't afford it. We have a cost benefit by virtue of sharing engineering costs essentially. And we also have a brand name advantage.

InformationWeek: Are there any technologies out there in use by competitors, perhaps Autonomy, that propose a different metaphor for search? Something other than keyword search?

Schmidt: I think those are fine. There will be multiple approaches to search. There's no single answer to search. Hopefully, we have the largest footprint, the lowest cost, the most end users. But there're always going to be specialized solutions and we should integrate with them in whatever way makes sense.

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