Fortune is the latest to point out that Google’s Web-based apps aren’t exactly taking the enterprise market by storm. Writes Yi-Wyn Yen: “Eighteen months after making a push into corporate software, only a handful of Fortune 500 and mid-sized companies have started using Google’s programs — mostly anti-spam or calendaring tools — and none have embraced Google Apps in its entirety, preferring instead to stick with Microsoft Office or its distant competitors.”
Tech executives interviewed by Yen list the same batch of reasons as alwsys that they’re sticking with their current software: reliability, security, missing features.
But that doesn’t mean that Google Apps aren’t doing their job. While it would be nice for Google’s enterprise division to someday contribute even a fraction of the revenue and profit that its search business generates, that’s not the point today. Right now, it’s all about bit-by-bit disruption. As SAI’s Henry Blodget wrote last December:
Disruptive technologies do not destroy existing market leaders overnight. They do not get adopted by the entire market at the same time. They do not initially seem to be “better” products (in fact, in the early going, they are often distinctly “worse.”) They are not initially a viable option for mainstream users. They do not win head-to-head feature tests. Initially, they do not even seem to be a threat.
Then the Disruptor improves its products, adding more features while keeping the convenience and low cost. Now the product appeals to more mainstream users, who adopt it not because it’s “better” but because it’s simpler and cheaper. Seeing this, the Incumbent continues adding ever more features and functionality to its core product to try to maintain its value proposition for higher end customers. And so on. Eventually, the Incumbent’s product overshoots the needs of the mass market, the Disruptor grabs the mainstream customers, and, lo and behold, the technology has been “disrupted.”
In this case, the near-term goal for Google Apps isn’t necessarily to win every 300,000-seat contract in a year, but to disrupt Microsoft (MSFT) user-by-user, habit-by-habit, over many years. If a handful of users start using free Google Spreadsheets instead of Excel — even for just small projects — that’s exactly the kind of progress Google (GOOG) is looking for. And no one expects that to take 18 months.
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