Google vs. Microsoft: How many $50 Apps Premier licenses does it take to equal $12B in annual sales?
Start the Google vs. Microsoft organ grinder again, because the search giant is going after the software king's most lucrative market: The desktop. After years of competing on the fringes of Microsoft's desktop software business, Google is announcing today a new premier edition of Google Apps for Your Domain (now just Google Apps) that includes docs & spreadsheets, Gmail, Google Calendar, Google Talk and 10 GB of storage. Also included: A 99.9% service level agreement (SLA) for Gmail uptime, and 24/7 phone support. Google Apps Premier costs $50 per user, a price far below any Microsoft offerings, including the $225 per person per annum cost of using Microsoft Exchange and the $499 cost of a standalone edition of Office Professional Edition. Google Apps Premier does not contain any presentation software, although Google is rumored to be working on a Powerpoint clone called Presently. Perhaps most vexing to Microsoft: Each of Google's productivity apps is capable of importing and exporting Microsoft Office formats such as .doc and .xls. Google Apps Premier is the third version of the package, which was originally announced in August. At that time, Google was roundly criticized for trying to offer business class software without any SLAs or tech support, a problem since addressed. But for all the hullabaloo in the blogosphere today, don't expect any immediate change in the marketplace. Google will need to prove that both its phone support and its security are up to spec first. And as we've seen lately, even a company like Google is prone to serious security flaws. Not to mention that Microsoft's $12 billion software business is an entrenched war machine not easily trifled with. Devil's advocate: Most of that $12B comes from a handful of huge companies, and Google just signed up two of them -- General Electric Co. and Procter & Gamble -- for Google Apps Premier. Counterargument: Microsoft already tried a hosted strategy with Hailstorm back in 2001. It flopped, despite the big name partners. At the end of the day, even if Google Apps Premier is wildy successful -- let's say they sell a million licenses -- that's still only $50M gross, which will have a neglibie impact on the bottom line. I've said it before and I'll say it again: Everything in service of advertising. Right now, Google is getting a lot of attention for this, but mostly because Microsoft is moving so slowly in the space. Once Microsoft gets its act together -- they've got to manage their cash cow carefully -- the real competition will begin.
|
Comments (5)
Punchline: It's a trick question or fuzzy math.
given that MS office or MS works ships on nearly every OEM machine a consumer, SMB or enterprise might buy, you can't say every person who gets office pays Full retail. So it's not a matter of a customer making a mutually exclusive purchasing decision and the whole $50 argument goes away.
You are right, even they go like wild fire and scale to 4-5million, they have achieved 1% dent in Office. The numbers are a bit galactic.
Posted by Seth | February 22, 2007 6:11 PM
Has anyone thought about the security problems with these kind of hosted apps? Sure, you can type memos and make spreadsheets and so forth, but what about trusting Google with that info? I wouldn't use it if they paid me $50 per year per user.
Posted by Chris R. | February 23, 2007 2:56 PM
I would like to offer another angle on Google Apps - for schools, colleges and universities worldwide:
My experience is that most students have Hotmail or Yahoo emails and continue to
use them once employed. Now that Gmail is generally available, this may change.
Google Apps especially Gmail / Gcalendar should be something every school in the world should be considering:
1. for new students - it's a no brainer
2. need migration tools for existing POP / IMAP emails for many returning students
3. need migration tool for MS-Exchange (and Lotus Notes) for all staff and teachers/professors (This would create a real MS Office war)
Google should want to convert all students to use Google Apps not just Gmail because:
a) if Google offered their premium service, currently $50/seat/year, for free or a smaller fee to schools, they will create a huge aftermarket
b) also takes marketshare from MSN and Yahoo
c) once employed these students will expose their new employer to Google Apps
d) huge subscription potential revenue
e) great positive publicity for Google
Maybe you could offer this "advice" publicly:
a) to Google
b) and bash Yahoo for not doing the same
c) and predict MS will do the same, after it's too late
Other thoughts on student and teacher productivity:
a) collaborative homework and team projects
b) integration with search for reference material
c) calendars of classes/events available to all students/staff for each school department
d) huge range of potential automation tools for faculty to evaluate/grade essays and other homework
e) YouTube video classes/courses
f) students could be physically anywhere in the world
g) with Google Translation, interaction in many languages
Disclosure: Don't own any GOOG, don't know anybody at Google and haven't seen any internal Google plans.
Cheers... Douglas
Posted by Doug Reimer | March 9, 2007 3:00 PM
I would like to suggest Google Apps Premium Edition - for schools, colleges and universities worldwide:
Google Apps for Schools is free and offers Gmail, Gtalk and Gcalendar which is something every school in the world should be considering. Google Docs and Spreadsheets, along with Page Creator, allow creation, sharing and collaboration on documents and web pages in real-time.
1. for new students - it's a no brainer
2. for many returning students, need migration tools for existing POP / IMAP emails
3. for staff and teachers/professors, need a migration tool for MS-Exchange and Lotus Notes. This would create a real MS Office war.
My experience is that students have Hotmail or Yahoo emails and continue to
use them once employed. Now that Gmail is generally available, this may change.
Google should want to convert all students to use Google Apps because they:
a) will create a huge aftermarket � mind share
b) takes market share from MSN and Yahoo
c) once employed, these students will expose their new employer to Google Apps
d) large subscription potential revenue for a premium edition
e) positive publicity for Google
Thoughts on student and teacher productivity for a premium edition:
a) integration with search for reference material
b) automation tools for faculty to evaluate/grade essays and other homework
c) integration with YouTube for video classes and courses
d) integration with Google Translation to allow interaction in many languages
e) collaboration with tech savvy parents
Maybe you could offer this "advice" publicly:
a) to Google
b) and bash Yahoo for not doing the same
c) and predict MS will do the same, after it's too late
Disclosure: Don't own any GOOG, don't know anybody at Google and haven't seen any internal Google plans.
Posted by Douglas Reimer | March 9, 2007 11:09 PM
Google has won a huge customer satisfaction/trust through Google and Gmail. The reason ? Both those award wining services are well known and familiar to users. For an instance people who used Yahoo as the search engine moved to Google due to several reasons; It is fast, Accurate, No annoying adds and simple. All those reasons were Expectations/Needs based upon the current experience (Yahoo was slow, less accurate, Loads of adds and kind of complex). So with the Gmail. Simply, Google Satisfied the unsatisfied users.That is the driving force of Google's success so far.
What would be the future of Google Apps ? Does this solution/service address the Expectations/Needs of the user whose well satisfied with the current experiance (Products like Ms Office/Openoffice)?
Posted by Asanga Manage | April 3, 2007 12:33 PM