Google is looking at its cloud-based apps for the enterprise not as a small side business, but as a major driver of future growth.
The company, known worldwide for its highly dominant search engine, has been pushing toward the enterprise with its cloud-based Google Apps. There's a lot of money to be made by selling to corporate customers and Google has wanted to grab a piece of that pie.
Nikesh Arora, Google's chief business officer, says that's going to change.
"Let's acknowledge where we are in the enterprise business," said Arora during Google's earnings call late last week. "I think it's become clear for us that we have a serious small but growing business which is going to be a future growth engine for Google."
Then, without naming the company, he brought up reports that Norfolk, Va.-based Dominion Enterprises, a marketing company, turned down Microsoft's attempts to woo their business from Google Apps to Microsoft's Office 365.
"I hope you read this week about a company who said competition was 50% more expensive than Google and "not as cool," said Arora. "That company is now a $200,000-a-year Google Apps customer."
He added that more than 5 million companies worldwide have "gone Google."
"I think [the enterprise business] is potentially huge for Google," said Ezra Gottheil, an analyst with Technology Business Research. "Microsoft's Office 365 is an important bulwark against Google Apps, but so far it is much more expensive. Some companies will choose to make a complete break from Microsoft."
According to a May report from market research firm Gartner, Google is winning one-third to one-half of new, paid-for, cloud-based office system seats, compared with Microsoft.
Brad Shimmin, an analyst with CurrentAnalysis, said Google is doing so well that it's not feeling much pressure from Microsoft's announcing updates to its Office 365 cloud-based suite last week.
"Microsoft is really following in Google's already established footsteps," said Shimmin.
Patrick Moorhead, an analyst with Moor Insights & Strategy, said Google is working hard to not only work its way into the enterprise, but also to go after Microsoft.
"The enterprise is important for many reasons, some more obvious than others," he said. "This is also about draining a very big profit pool from Microsoft."
Melissa Webster, an analyst with IDC, said Google is waging a multi-pronged attack on Microsoft and their enterprise push is part of that.
"Google has been mounting a broad-based attack on Microsoft for several years now... From that perspective, Google enterprise is one more arrow in that competitive quiver," she said. "It's antagonizing Microsoft, a key competitor of Google's in several areas. And if you can attack an existing, key business that your competitor strongly needs to defend, it is a useful distraction."
Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed. Her email address is email@example.com.
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