Google may be lapping Microsoft in search share and online ad dollars, but the real threat is Google Apps—its free Web-based desktop applicationsI was discussing this a few days ago with someone: What is Google's game with Google Apps?
There are several possibilities, but two stand out:
- A new venue for targeted, personalized and relevant content (ads, news articles, advice, etc), in line with their core business model. This puts google-vended content in front of the corporate users at the one place where they spend most of their working-time: in their workspace, laboring away at word processors, spreadsheets, presentations, meetings and, of course, emails. These users are key commerce generators: they have needs, are aware of them, and have the means to satisfy them, if the right opportunity comes along - say in the form of a well-timed well-placed ad or link to an article subtly endorsing a product or product category. All perfectly legitimate, and very reasonable.
- An Office-killer for small-to-mid businesses, in line with widening the scope of Google as a company. This will help businesses cut costs (from $500/yr/user to $50), and provide all the advantages - and disadvantages - of a fully online application. Few other pros: online collaboration (in various forms), Google's reputation for innovation, light-weight (no legacy-support requirements). This expands Google's market to the very lucrative office productivity apps space, and it will be easy for them to get a foothold at the lower end of the scale.
3 comments:
I think Google COULD take on Microsoft with Google Apps. My question is, do they have good reason why they should be doing it.
Don't get me wrong, I think Google Apps are really cool as a geek. But, I have problem seeing it being widely adapted unless Google package and sell the back-end service as a product for larger corporate customers to run on their own, much like MS Exchange. Because for a variety of legal and privacy reason, most large companies will not be able to use Google Apps for sensitive corporate documents and leave them in Google's control.
For the SME market, I could see the use case, but I still don't necessarily see the revenue model. It has to do with context. If I am focused on creating a spreadsheet, the last thing I would want to see or respond to is an ad. It's the same dilemma why ads are not working for Facebook and YouTube. The user is focused on the activity (communicating, watching and working) and don't want to be distracted by ads. Search ads are unique because in that context, you actually WANT information.
I just don't see the revenue model, but if Google wants to build cool things for geeks like me, I'm all for it.
Same reason that Microsoft is getting into Search and Ads. One could argue that Microsoft doesn't have to aggressively get into online business but keep the focus on improving it's enterprise stronghold. Just because Search has become so important does not mean the enterprise space is losing its revenue potential. Both these businesses are huge and neither company dominates them both. There is more to it than just diversification.
At a very high level, this is guided by two principles:
1. Market likes having choice. Be it Advertisers or Powerpoint users.
2. If company A lets company B monopolize it's own field, there is always a risk that company B can invade into company A's teritory using the resources at its disposal. By fighting back, companies keep each other on their toes and force them to invest into their core products to be competitive- even if they are monopolies. By doing so, they secure their own monopolies.
Therefore these are long-term investments for both Google and Microsoft. They are not looking for a payout anytime soon. Indeed, Google does not serve any ads on its Apps today. Nor is MSN/Windows Live profitable yet.
Post a Comment