11 Jan

Google expands tech turf

first_imgSAN FRANCISCO – Google Inc. will begin selling corporate America an online suite of software that includes e-mail, word processing, spreadsheets and calendar management, escalating the Internet search leader’s invasion on to technological turf traditionally dominated by Microsoft and IBM. The expansion announced late Wednesday threatens to bog down Microsoft Corp.’s efforts to persuade corporate customers to buy the latest version of its market-leading Office suite that was developed along with Microsoft’s new Vista operating system. Google’s software bundle, to be sold for a $50 annual fee per user, also poses a challenge to International Business Machines Corp. and its Lotus suite. While Google’s latest foray into the corporate software market seems unlikely to topple the status quo right away, AMR Research analyst Jim Murphy said it’s only a matter of time before the Mountain View-based company becomes a major player. “This is just the beginning,” Murphy said. “The real impact of what Google is trying to do probably won’t be evident for another five years.” Google has been offering a free version of its online software suite called Google Apps for the past six months. More than 100,000 small businesses and hundreds of universities nationwide are using the free service, Google said. The fee-based version, Google Apps Premier Edition, includes five times more e-mail storage – 10 gigabytes per e-mail box – as well as a guarantee that all services will be available 99.9 percent of the time and around-the-clock technical support. Google also is adding mobile access to e-mail accounts through the BlackBerry devices that tether workers to their offices. By dangling its business software package at such a low price, Google is giving companies a greater incentive to delay buying Microsoft’s Office 2007 as they assess the pros and cons of a less expensive alternative, said Nucleus Research analyst Rebecca Wettemann. “The timing (of this offer) is just brutal for Microsoft. It’s definitely a shot across their bow,” Wettemann said. As they usually do, Google executives downplayed the company’s intensifying rivalry with the world’s largest software maker. “We are not in this to get Microsoft,” said Dave Girouard, general manager of Google’s business software division. “We are in this to offer more compelling choices for consumers and businesses.” Microsoft welcomes the competition, said Kirk Gregersen, the Redmond, Wash.-based company’s director of the Office suite. “It helps keep us on our toes.” If it can sell more software to companies, Google could become less dependent on online advertising. Google already has been selling its search technology to companies, but that initiative has only had a modest impact so far. Software licensing accounted for slightly more than $100 million, or 1 percent, of Google’s $10.6 billion in revenue last year. Microsoft, in contrast, relied on software sales for most of its $44 billion in revenue last year. While Google has been expanding into software applications, Microsoft has been trying to build a more formidable Internet search engine. That effort hasn’t prevented Google from widening its lead in online search during the past two years, emboldening the company to branch into other fields like corporate software. Just how much Google is undercutting Microsoft’s price is unclear. The listed retail price for Microsoft’s Office suite ranges from $149 to $679, but corporate customers generally negotiate substantial discounts based on the number of licenses that they buy. In research released last year, Merrill Lynch analyst Kash Rangan estimated that the average corporate cost for Office works out to about $60 to $120 annually per user, assuming the software is used over a two- to three-year cycle. Price is rarely the only concern of large companies when they are deciding which software products to buy. Security, reliability and performance also sway corporate buying decisions.160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!last_img read more