Google has had some success getting companies to try its Web-based Google Apps suite: In a February profile, Google boasted half a million customers; it repeated that number during its earnings call yesterday. And in a blog post earlier this month, the company said more than 3,000 companies sign up for Google Apps every day. What Google isn’t bragging about: Revenues from Google Apps.
A tipster posits that 99% of the businesses signing up aren’t paying for the Premier Edition — $50 per user, per year — but are just sampling/using the free Standard Edition. (Our tipster claims to have verified this with two Google marketing staffers; we have not.)
Meanwhile, our tipster adds, Google has taken Postini (the hosted Internet security firm it bought for $625 million in 2007), cut prices to spur growth, and slashed its revenue potential from a $100 million annual run rate to a fraction of that. “Postini was the ROLEX of the email security marketplace but Google has turned Postini into a TIMEX instead,” our tipster says.
For argument’s sake, let’s say all of the above is true. So what? It’s not necessarily good that companies aren’t paying for Google Apps, but it’s not like Google (GOOG) is counting on that revenue to make its numbers, either.
Most important: Any time Google can get a company to use Google Apps — even for free — instead of cardboard box-based software that Microsoft (MSFT) charges money for, it’s disrupting its biggest rival. That — not earning a few bucks per seat — should be Google’s main goal in the software market for the foreseeable future.
Update: Google’s Andrew Kovacs responds, but wouldn’t elaborate what percentage of Apps customers are paying vs. free.
We read your recent post about the momentum of Google Apps in the market, and would like to clear up some misperceptions. Yes, many of our customers are small and medium sized businesses, because it is so natural for these businesses to embrace the cloud quickly. But many large enterprises are also now adopting the paid version of Google Apps, which launched less than 18 months ago. We’re seeing great adoption of both free and paid version across the world and across industries.
For example, on Google’s earnings call yesterday we mentioned the following:
– Valeo, one of the world’s leading automotive suppliers, has contracted with Google’s enterprise division to provide Google Apps to 32,000 users globally.
– The District of Columbia signed a contract to provide Google Apps Premier Edition to all 38,000 DC government employees. Migrating to Google Apps will help DC avoid the expense of owning and maintaining on-premise solutions and focus more of its IT spend on strategic mission goals.
– Sanmina-SCI, a global leader in electronic contract manufacturing and a $10 billion dollar plus enterprise, purchased Google Apps for more than 1,000 users to help them with collaboration and overall productivity and innovation.
– Telegraph Media Group, one of the UK’s leading multi-media newspaper publishers, is providing Google Apps Premier Edition to all its 1,400 employees as part of an overall company strategy to move toward cloud computing.
– The same is true of our security products. Among these customers, Valeo and Telegraph are also customers of Google Message Discovery, which is powered by Postini technology.
These businesses join Genentech, Salesforce.com, and many other companies of all sizes that rely on Google Apps Premier Edition for communications and collaboration.