This may be the year Google makes or breaks GAPE, the enterprise version of Google Apps that lets businesses license hosted e-mail, instant documents, spreadsheets and other applications for $50 per user per year.
The numbers sound great on paper: 2,000 new businesses per day signing up for Google Apps. Then there are hearty testimonials from customers now freed from Microsoft Office or Lotus Notes.
The problem is that neither Microsoft nor IBM will wait for Google to come and take market share. Microsoft has Office Live Workspace, and it's likely IBM will answer with an SAAS (software as a service) version of Lotus Symphony.
Though analysts were skeptical about Google's ability to offer a portfolio in the SAAS cloud that observed regulations regarding records management, Google answered the call in July by buying security vendor Postini for $625 million.
The deal seemingly cleared the path for large enterprises to jump on board. Google announced Capgemini as a major taker for its enterprise suite in September, but since then, the enterprise waters seem to have calmed for Google.
Google Enterprise Executive Vice President Dave Girouard told eWEEK in December there are big customer contracts coming down the pike in 2008, some of which will even dwarf the Capgemini contract in scope, covering thousands of seats.
Appirio CEO Chris Barbin, whose company has built a series of Google Gadgets that serve up Salesforce.com information through the iGoogle personalized home page, was more specific in an interview with eWEEK Jan. 3.
Barbin said Google is trying to secure six to eight large prospects considering GAPE for anywhere from 1,000 to 20,000 seats. One prospect expects to scale to 100,000 seats. "These are large, sophisticated IT shops that are kicking the tires pretty hard," he said.
Though Barbin couldn't name those customers, he said Google is placing a heavy emphasis on financial services and high-tech, the verticals where Office and Lotus are layered so thick. Appirio is right in the mix, helping Google with its application development, SAAS strategy and SAAS rollout expertise.
Still, analysts at IDC are skeptical that Google will get the traction it needs to muscle Microsoft and IBM from major accounts.
Click here to read more about Google's acquisition of Postini.
IDC analyst Melissa Webster said online tools such as a word processor, spreadsheet and presentation applications are not the draw, noting that only 6 percent of the respondents in a survey she conducted are using Google's tools. Moreover, virtually all of them are also using Microsoft Office.
"So I don't see Google taking share," Webster told eWEEK. "Plans to us show growth on the Google side, but still, no erosion of Microsoft usage. And the same survey shows a significant number of users are planning to upgrade to Office 2007 next year."
Barbin, however, said Google will take share, noting that users are tired of Exchange and Lotus Notes applications that are expensive, complex to manage and dated.
"I think Lotus is the asbestos of software. It's everywhere, no one wants to get rid of it, but you have to because it's a health hazard," he said.
Barbin also said that even if Microsoft and IBM come to the fore with major SAAS office portfolios, they won't be able to match Google's speed to market.
But IDC analyst Rachel Happe said Microsoft is not going to stand by and watch Google own the cloud. Happe also said she doubts Google's enterprise products are set up with the service provisions and infrastructure to support big business the way Microsoft and IBM do.
Click here to read about customers' wish list for Google Apps.
Moreover, Happe said, Google is involved in so many big ideas, from social platforms to wireless networks, that it will be really hard for the company to chip away at Microsoft and IBM in the office and collaboration space.
This is why 2008 will be a telling year for Google Apps. If Google can land a dozen large GAPE installations over the next 12 months, it will give the suite the momentum it needs to roll forward. If the big fish don't bite, it's unlikely the company will put the same resources behind it.
If GAPE fails, it's not clear how much Google will lose. The beauty of this SAAS software is that it is a fortified version of the consumer Google Apps that the company has been rolling out the last few years. Users will still use the free editions of Apps; in the cloud, it's all relative.
Moreover, unlike Yahoo, the company wouldn't have to shut down the whole enterprise division—Google still has Geo and the Google Search Appliance to hawk.
Even so, a healthy SAAS business could be a major supporting money-maker for Google when the online ad market matures in five years or so.
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