TechCrunch’s Michael Arrington cites a Google source who puts Google Apps revenue at 2%-3% of Google’s revenue, or about $400 million. This up 10X from $40 million last year.
For paying Google App customers (small minority of all users), our understanding is that the price is about $50/user per year. So this would imply about 8mm users, which seems high*. But let’s take it at face value for a moment.
$400 million is peanuts relative to Office ($18 billion) and Google ($17 billion), but it’s still meaningful and impressive. The product didn’t even exist three years ago. A stand-alone company offering Google Apps with $400 million in revenue would be valued at at least $4 billion, based on Salesforce.com’s 10X revenue multiple.
Not bad for a product (Google Apps) that many people still consider irrelevant. Also not bad for a company (Google) that most people still consider a one-hit wonder.
If Microsoft doesn’t view Google Apps as a disruptive technology that could eventually decimate the value of its most important business, it should. Nick Carr hears Microsoft is finally preparing to launch a Google App killer. For the sake of Microsoft shareholders, we hope so.
*UPDATE: So far, the SAI reader consensus is that TechCrunch’s source is hallucinating. See below for logic.
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