Friday, April 19, 2024

Is the Enterprise Google’s Little Bighorn?

Datamation content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.

Google is an incredibly successful company but its revenue comes from advertising, not from selling products.Free can be very attractive to enterprises and government but if the cost of “free” is the privacy of employees, most will likely find the cost exceeds the value of the offering. Instead, for Google to be successful in the enterprise it will need to adopt a model that matches what the enterprise wants to see.

This is something Apple has successfully avoided and the cost to Microsoft of becoming an enterprise vendor may have been the loyalty of the users that founded them.

As a result, Google’s attack on the enterprise may be more similar to Custer’s Last Stand then the success we’ve seen from them so far.Let’s explore that.

Google’s Revenue Model

The vast majority of Google’s revenue comes from its ability to manage on-line advertising and provide metrics that tie back to something the advertiser sees as a measurement of success.This puts Google in the advertising business because the business you’re in is typically tied most closely to what people are paying you for, and people are paying Google for advertising.

This would suggest that Microsoft and Google aren’t natural competitors anymore than Microsoft and Netscape initially were.Microsoft wasn’t in the advertising business and there is enough money in that business – as Google has demonstrated – to create a very large and financially successful company without drifting over into Microsoft’s turf.

But, this market is unfortunately defined by avoidable battles and currently Microsoft and Google are at war.

Google’s Enterprise Play

Like Netscape, Google has felt strongly it needs to go in and attack the markets where Microsoft is dominant.However, its attacks are largely made by using their advertising revenue to fund a lower cost, often free, alternative to something Microsoft either charges for or also gives away for free.

But while the cost of the offering is certainly attractive the sustainability and risk associated with it, so far, have not been. And this may not be easy to correct.

First, Google needs a way to establish itself as a viable player in the enterprise space, something that Microsoft initially needed IBM’s help to do itself.Once established, Google has to be able to more traditionally match the services and products they are providing to the funding sources, or find a way to get enterprises to allow advertising to their employees to fund the offering.

This last would seem brain dead easy until you realize that to get the kind of returns Google would need, it will have to supply personal and corporate information on these potential buyers that most enterprises would be unwilling to easily give up. Targeted marketing is where the money is and to do that you have to be able to profile the users.“Unwilling” is likely a substantial understatement.

This means, long term (outside of trials and companies that operate on the bleeding edge) Google will need to become more like a traditional software company with real enterprise revenue. This will be at least as difficult for Google as it is for Microsoft to establish a revenue source based on advertising. Neither firm is structured to operate well in the other’s area of competence.

Google vs. Microsoft

Now that these two mismatched companies are joined in battle, the winner will likely be decided by the one that can do more damage to the other’s revenue source.

For instance, Microsoft forced Netscape to destroy their browser revenue stream long before Netscape had worked out either their portal or their enterprise business and won. Google is attempting to force Microsoft to prematurely cannibalize its desktop revenue streams to respond to the threats represented by the Chrome OS, Chrome Browser, and Android.

Microsoft is attempting to do deals with News Corp and other content providers to lock Google Search out and collapse the company’s advertising revenue stream.Neither firm is critically exposed to the other’s attack. Microsoft’s base is largely institutionalized and incredibly difficult to move to new technologies. And Google’s access to content is so great that many feel News Corp will take more critical damage to its revenue more quickly should they try to cut Google off.

I often wonder if Microsoft’s better attack against Google would have been to stay out of search and argue unfair competition as Google approached monopoly status and seek government help before entering the segment.

For Google, going after Microsoft’s Enterprise business seems seriously premature and it likely would have done better focusing on Apple first (which they kind of are with the Android) and consumers, and then using a solid position there to drive with the user into the enterprise, much as RIM effectively did.

Conversely, Google could partner with IBM, Dell, or HP (or all three) to get there much like Microsoft did.Google is too fixated on Microsoft. And the company is at a stage where its are unwilling to partner effectively in many ways, mirroring the mistakes of those that preceded them.

Wrapping Up: Google’s Enterprise Success Unlikely

What companies don’t seem to get about the enterprise is that it isn’t about who has the best product or even the cheapest product. It isn’t even about who has the best solution.

It is about understanding how to dance the enterprise dance, being invited to the ball, and then developing a happily-ever-after relationship that benefits both parties.I’m still amazed at the number of people who lost their jobs on both the vendor and IT side when Netscape (and others) didn’t fundamentally understand this.Google is badly positioned for the enterprise and while it has the resources to try to plow into this market the cost may end up being more than even this very profitable firm can bear.

The lesson from General Custer is, yes you can go into someone else’s turf and do a lot of damage; surviving the effort, however, can be problematic.

Subscribe to Data Insider

Learn the latest news and best practices about data science, big data analytics, artificial intelligence, data security, and more.

Similar articles

Get the Free Newsletter!

Subscribe to Data Insider for top news, trends & analysis

Latest Articles