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Will Google CEO shift undermine enterprise efforts?

What new CEO Larry Page should say to assuage Google’s enterprise customers

By , Network World
January 22, 2011 06:05 AM ET

Network World - In the nascent battle between Google and Microsoft for enterprise software customers, there is one stark reality that customers who choose Google must accept: Google's future does not depend on the success of Google Apps.

Whereas Microsoft needs Windows and Office to maintain long-term financial success, Google makes nearly all of its money on advertising, rather than on software licenses. In 2010, Google earned $28.2 billion in advertising revenue, and only $1.1 billion in non-advertising revenue.

HEAD TO HEAD: Google Apps vs. Microsoft Office

That doesn't mean Google can't make great business software. But it does mean current or potential Google customers and business partners should carefully examine any change to the core structure of the company, in case it affects the future of Google's enterprise software business.

Such a change occurred Thursday, when longtime CEO Eric Schmidt said he will step aside in April so that co-founder Larry Page can take over the reins. Schmidt, previously CEO of Novell and CTO of Sun Microsystems, has by far the most enterprise experience in the triumvirate that runs Google, which also includes co-founder Sergey Brin.

"Eric clearly had passion for enterprise software," says Gartner analyst Whit Andrews. "He cared about enterprise software. He worked at a lot of companies that sold enterprise software and bunch of enterprise products. That history is not in place with Page."

Google officials consider Google Apps a strategic business, and "they're highly ethical so they wouldn't just pull the plug," adds Gartner analyst Tom Austin.

But it remains to be seen how committed new CEO Larry Page will be to enterprise customers. From an investor perspective, a blow to Google's enterprise business would be bad but not catastrophic. But "from an enterprise customer's perspective, obviously there is a great deal more concern," Andrews says.

What to say

To reassure these customers, Andrews says Page should say several things. "He could say, 'We intend to grow the portion of our revenue that is coming from the enterprise business. We are investing in the enterprise. We see it as an exciting area for growth. We hope that it takes off.'"

Unless Page delivers that kind of message, it will be difficult for customers to know for sure how much of an emphasis he intends to put on the enterprise business. "If Google is a real enterprise company, then we will need to see Page act like that is the case," Andrews says. "That will include evangelism for the enterprise business, similar to what we saw from Eric."

In addition to paying customers, "If I were a managed services provider I would be looking for that same kind of message," Andrews adds.

Google boasts that more than 3 million businesses are running Google Apps, which costs $50 per user per year and includes Gmail, Google Calendar, Google Docs and several other services.

These are mostly small businesses. Gartner says Gmail has captured less than 1% of the enterprise e-mail market, counting only businesses with at least 100 paid seats. 

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