So far, Google is almost entirely about the consumer market (if consumer and professional users can be separated at all), with advertisers to pay for it. 'Licensing & Other Revenue' was just 1.0% of total revenues in Q1 of 2007. Now, Google appears to be beefing up this tiny part of its business model.
Ultimately, the advertising market will prove to be a cyclical market, so why not do a little diversification while growth is still double digit? In Q1 of 2007 revenue growth was still around the 65% level and personnel numbers grew 80% yoy. Obviously this reminds us of Yahoo! and its diversification efforts, several years ago.
The licensing and other revenues stem from the Google Search Appliance sale and licensing of for-pay applications (applications that are free as long as they are not used in a commercial way, such as SketchUp and Earth).
Recent developments in this space include:
- February 22: launches Google Apps Premiere Edition (50 $/year/user)
- April 19: acquisition of Marratech (video conferencing software)
- May 18: launches Google Apps Partner Edition (for ISPs)
- May 30: launches Google Gears (offline application of Gmail, Docs & Spreadsheets, etc.)
- June 20: plans slide presentations addition to Apps
- June 27: additions to Docs & Spreadsheets (folders, etc.)
- June 27: teams with Ingram Marshall (Search Appliance distribution)
- July 9: acquisition of Postini (adds security and compliance solutions to Google Apps)
- First, competition with Microsoft is intensified, especially from the ever increasing Google Apps suite and the addition of both Gears and Postini.
- I suppose a major sales push of the for-pay services must be on the horizon, mirroring the Ingram Marshall deal for the Search Appliance.