Monday, July 09, 2007

Google adds another element to its enterprise strategy

Today's Postini acquisition raises the issue of how serious Google is on its efforts aimed at the enterprise market. I think there is more to come.

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.

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