An analyst says Google is now in a stronger position as cloud computing grows.
The failure of Microsoft to acquire Yahoo
could echo in
the future of the enterprise market with Google emerging as the lead horse in
the race, according to one analyst.
Interarbor Solutions analyst Dana Gardner said Microsoft's abandoning of its
pursuit for Yahoo will not only keep Google in the lead of online search and
advertising markets, but could have an impact on the future of the enterprise
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Google is a relatively small player in the enterprise, selling
search appliances to businesses and a collaboration suite
that its hosts on its own servers
as part of its cloud-based Internet services strategy. All told, these are
believed to constitute only 2 percent of the company's revenue.
But as the computing landscape shifts increasingly toward cloud computing, Gardner
said, Microsoft's traditional client/server and packaged software model will be
threatened. Businesses are already looking to use applications that Google
hosts in its own data centers. Microsoft wants to get to the same place and
needs Yahoo to help do it.
"There's a great deal of consensus that the older approach of a client/server-based
architecture is cost-inefficient," Gardner
told eWEEK, adding that the cost of maintaining a PC in many enterprises is
more than $1,000 a month.
Moreover, Microsoft's laborious Windows Vista operating system rollout hasn't
assuaged any of these pains, meaning businesses will look at alternatives such
as cloud-based computing or SAAS (software as a service).
In effect, if a company like Google lets customers use apps for $12 per user
a month, more businesses will be compelled to look at the cloud, Gardner
said. Microsoft, which broke off its bid for Yahoo on May 3, is in excellent
position to do that given its value chain of partners and suppliers, segueing
from its on-premises assets to more service-based offerings.
"This will come down to a competition of cost," Gardner
said. "Microsoft is at a disadvantage because it's transitioning from a
previous high-margin, on-premises software business to a more low-margin,
high-volume cloud-based business. They're already at disadvantage economically
because they're killing one cash cow to create a cash goat. Google doesn't have
to kill anything because its ad-based revenues are all cloud-based already."