In-Depth

It’s Official: Google Enters the Apps Game

Can Google Office—not to mention a Google/Microsoft grudge match—be far off?

• By Stephen Swoyer
• 09/05/2006

It’s official: Google Inc. last week kicked off its long-awaited foray into enterprise applications, announcing a package of hosted apps—dubbed Google Apps for Your Domain—that it plans to market to enterprise customers. While Google’s ambitions at this point stop short of the office productivity space, can a Google/Microsoft grudge match be far off?

Google Apps for Your Domain consists of e-mail, calendaring, voice over IP (VoIP) and Web-authoring tools. It’s packaged in either a “standard edition”—a beta of which is now available—or an as-yet-undeveloped “premium version,” which will boast (as-yet-undisclosed) advanced features. Google Apps for Your Domain standard edition will be available at no cost; the premium edition, on the other hand, will sell for an as-yet-undisclosed amount.Market watcher Gartner Inc. says Google’s still-gestating Apps offerings are a telling indication of its future market strategy. “This announcement offers a glimpse of the scope of Google's ambition of generating significant revenue from the enterprise sector to avoid relying solely on the consumer market,” write Gartner analysts Whit Andrews, David Gootzit, and Gene Phifer. “Its plan to provide applications such as e-mail, calendaring, instant messaging and voice chatting is a logical next step in the progression of deepening its relationship with users. Increasingly, Google has been placing its products and services directly in front of end users, without the intercession of IT departments.”

Google has already disclosed at least one application deliverable—Google Spreadsheets—that places it in direct competition with Microsoft Corp., as well as with other BI ISVs, too. Although Google positions its spreadsheet offering as a consumer-grade tool, its announcement of Google Apps makes the development of an enterprise version of Google Spreadsheets—perhaps as one of several “premium” additions—all but inevitable. “We believe that Google has elected to offer communications applications first mainly because of their popularity. Also, Google's move will allow time for productivity applications based on word processors and spreadsheets to mature,” the Gartner trio argues.

That might happen more quickly than you think. Google Spreadsheets, for example, didn’t just appear out of thin air. It’s actually the product of the search giant’s acquisition of 2Web Technologies, which markets technology (dubbed XL2Web) that helps companies rapidly migrate Excel spreadsheets to the Web and expose them as fully dynamic HTML documents. In fact, 2Web’s XL2Web Publisher supports bread-and-butter Excel features such as cell validations, data formatting, styles, and graphs, too. Right now, Google officials position Spreadsheets as a basic service that lets users store spreadsheets on the Web. But Google officials say Spreadsheets already supports some degree of collaboration between and among users (in fact, several users can share, update, and edit the same spreadsheets at the same time), and users can also tap Google’s AJaX-powered Chat service to collaborate while they’re editing or viewing spreadsheets. In addition, Google Spreadsheets gives spreadsheet owners control over who may edit or view their spreadsheets by listing specific consumers by email address.

What kinds of customers will opt for Google’s hosted applications? Probably, in some sense, the same kinds of customers that opted for the comparatively limited CRM functionality first shopped by salesforce.com all those years ago. “We expect these services initially will be adopted by enterprises that have less-demanding feature needs and are extremely sensitive to prices. Some enterprises will wait for a no-advertising version to become available for formal fees. Google intends to offer for-pay subscription versions in the near future, possibly as early as 2007,” write the Gartner researchers.

Of particular concern for enterprise customers, Gartner researchers argue, is application availability—particularly with hosted apps. Consequently, Google must convincingly demonstrate the stability and reliability of its Apps offering before enterprise adopters begin to think seriously about deploying it. “The way in which Google chooses to address service-level agreements (SLAs), security, technical support and integration with existing applications will be critical to Google Apps' destiny,” they point out.

And then there’s the Microsoft angle. Google Apps—or, more precisely, the probable contents of its premium variation—amounts to a direct shot across Microsoft’s bow. Redmond isn’t the kind of competitor to respond meekly to such a challenge. “We believe Microsoft is likely to respond aggressively. The rivalry between Google and other vendors like Microsoft will probably confuse the market by producing overlapping business models and unintegrated, competing products, but could benefit users of both product lines by invigorating competition,” the Gartner trio concludes.

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