Google Eyes Microsofts Land

Company targets businesses with communication tools

Google announced on Aug. 28 Google Apps for Your Domain, a set of ad--supported communications tools such as Google Talk, Google Calendar and Gmail, to target small businesses that dont want to install and maintain software. This initial volley, which analysts say is targeted at upending Microsofts Windows Live plans, is expected to become part of an escalating battle between Google and Microsoft.

But will enterprise customers give Google a chance?

In a statement, Google said its target market ranges from family Web sites, community groups, nonprofits and small businesses to universities and large enterprises. Google said it also will create a premium ad-free version "for organizations with more advanced needs" with details on features and functionality "coming soon."

Technology executives say Google may be onto something but that it will take a lot to get them to move away from Office. Among the issues that need to be resolved are those having to do with privacy; whether large companies trust Google with their data; costs of migration, integration and training; and reliability and uptime.

Regarding reliability of Googles service, some executives said offline access is a concern, as it is with many SAAS (software as a service) models. "I just dont see a major move away from Office to save a few bucks," said John Webster, chief strategy officer for Certus Managed Hosting Solutions, in Sioux Falls, S.D.

According to Webster, Google Apps for Your Domain faces the same inertia challenge as Sun Microsystems StarOffice effort—or any other rival—when it comes to upending Microsoft Office, a standard that technology managers are generally comfortable with. "Ask Sun Micro how it is to take on Windows Office. Office is the default standard," he said.

Mobility of Googles applications also would need to be addressed to woo enterprises. "Part of the question of portability is the ability to sync with handheld devices either using [Microsofts] Exchange ActiveSync, [Research In Motions] BlackBerry services or Good [Technology] software," said Kevin Benson, chief technology officer, South Carolina Department of Parks, Recreation & Tourism, in Columbia. "No solution Google is currently providing or has announced would meet the needs of small or midsized businesses which rely on mobility as a key component."

Indeed, analysts have little expectations that Google can be an enterprise player with its latest application bundle. In a research note, Merrill Lynch analyst Justin Post, in New York, said he doesnt expect Google to garner "material revenue from software over the next year or material penetration with large enterprises for Googles hosted products."

So whats the real endgame? Analysts say Googles latest application effort telegraphs where the company is aiming in the future. "We think this highlights the idea of the network as the computer, an idea a long time coming," said Benjamin Schachter, an analyst at UBS, in New York.

Webster argued that Googles effort is really about usurping Windows Live, Microsofts effort to bridge its core operating system with SAAS. However, even this will be a challenge for Google, since Microsoft is embedding Windows Live links into Vista; that captive audience of Microsoft users are likely to migrate to Office Live from Office instead of to a new set of applications.

Microsoft Watch Editor Mary Jo Foley and Staff Writer Scott Ferguson contributed to this report.

Grouping Google

The search giant is bundling private-label communication applications to target businesses. Here are the components:

* Gmail Offers e-mail to workers, with 2GB of storage per account

* Google Talk An instant messaging tool

* Google Calendar Shares events and schedules meetings

* Google Page Creator Creates and publishes Web pages

Source: Google