As Google turns 10, enterprise success in question

Most computer industry companies would feel satisfied with ruling the highly lucrative and technically complex search engine advertising market -- but not Google.

As the search giant celebrates its 10th anniversary of incorporation this month, riding a years-long bonanza from its search business, it is also a scrappy underdog with lofty aspirations in the world of software for workplaces.

As such, Google, the unmatched consumer search engine champion, must compete against seasoned and formidable IT providers like Cisco, Microsoft and IBM. This is no small undertaking, requiring a long-term commitment and heavy investments, while facing real risks.

The jury is still out on whether it's wise for Google to invest significant resources in providing software for enterprise search, office productivity, mapping, collaboration and communication.

It's estimated that about 98 percent of the company's revenue comes from consumer search advertising, making the company's Enterprise unit a small side business currently, at least from a dollar perspective.

Industry observers recommend that IT and business managers keep this in mind as a risk factor when considering buying enterprise products from Google.

Although Google maintains it is committed long term to its enterprise products, it isn't unheard of for large companies to change course and pull out of non-core businesses with little advanced notice.

The warning should be heeded particularly by CIOs in large companies contemplating a major investment in products such as the Google Apps Premier hosted communication and collaboration suite.

"I would absolutely ask that question," said Forrester analyst Rob Koplowitz. "As long as 98 percent of Google's revenue comes from other sources, this question of whether they're in [enterprise software] for the long term will always come up. This isn't their core business."

Burton Group analyst Guy Creese concurs. "In its heart of hearts, Google wants to succeed as a provider of software to large enterprises, but they haven't yet signaled that it's a do-or-die kind of thing," Creese said.

The highest-profile product in Google's Enterprise unit is Apps, whose free versions have proven very popular with individuals, small and medium-size businesses and educational institutions.

Google could have opted to just target universities and SMBs with the Standard and Education editions of Apps, generating revenue from advertising. It could also have been content to lure SMBs to the Premier version, which is a very affordable option at US$50 per user per year, when compared to Microsoft Office and Exchange.

"The things preventing Google from being attractive to enterprises aren't necessarily big issues for SMBs," Creese said.

Google could rake in robust revenue from SMBs, which are often underserved by major vendors and hold off on purchasing IT products that they need but aren't priced right for them, Koplowitz said. "There's a lot of money to be made there," he said.

This accounts for much of the success Google has had with its Search Appliance and Google Mini, which have disrupted the enterprise search market, where systems have traditionally been pricey and complicated to install, manage and use. Priced aggressively and built with a low-maintenance, plug-and-play design, those products have hit a sweet spot with SMBs and schools.

The IDG News Service is a Network World affiliate.