Rumors are starting to surface that Google may be de-emphasizing its Google Apps enterprise software-as-a-service (SaaS) play for a renewed focus on its core search/advertising business, and a reallocation of resources and expertise towards social networking. If that’s true, “disruptive” is an understatement for the potential implications.
Yes, Google Apps seems to be in a solid place right now, with four million businesses signed up at last count. But Google Apps is so relatively insignificant to the company’s overall advertising-driven business model that it didn’t even get a mention in the search giant’s Q1 2012 earnings statement, released earlier today. Best estimates place Google Apps as representing a meager 3 percent of overall Google revenue, and it’s obvious that Google Apps is a second-class citizen at the Googleplex, behind its sexier darlings like Chrome, Android or, yes, Google+.
What’s more, the rumor is based in solid fact: Google Apps is experiencing an unusually high level of turnover. While his departure from Google seems to have been on fairly good terms, the loss of former Google Enterprise President and VP of Apps David Girouard was surprising, to say the least. His tenure saw Google go from (almost) search-only to major force in the enterprise SaaS marketplace, and Girouard could be relied on as one of the cloud’s fiercest evangelists.
Girouard’s departure was actually the last in a series: Google Apps product management director Matt Glotzbach switched to the company’s European YouTube unit last summer, while Google Apps PR gurus Andrew Kovacs and Mike Nelson left for Sequoia Capital and Google Japan, respectively. And according to the Wall Street Journal, Tom Sarris, the new public relations face of Google Apps, has not once met with Google Apps chief Sundar Pichai in his three months in the role.
Google’s Achilles heel in the marketing department – at least when selling to the enterprise – has always been the search giant’s ultimate lack of a serious stake in the enterprise SaaS game. These days, Google Apps faces more competition than ever in the cloud, with Microsoft Office 365 finally up and running, and Redmond has no problem exploiting that fact with its own brand of propaganda.
This is where we get into speculation territory. If Google de-funds, de-emphasizes, or, if I even dare suggest it, sells off its Google Apps business as it turns back towards competing with Facebook, it would prove Microsoft right all along. That’s a problem. I’ve been a huge critic of Microsoft Office 365 and its reliance on forcing users into adopting traditional software to take advantage of its cloud services.
Google is not perfect by a long shot, but its so-called 100% Web strategy is an important counterpoint to Microsoft’s philosophy of “software plus services.” An enterprise SaaS market without Google would be a very different animal indeed. In a blog entry entitled “Push Comes to Shove,” Sridhar Rambu, CEO of cloud productivity suite provider Zoho, proudly proclaims his company’s readiness to migrate customers away from Google should it come to that.
But here’s where I want to get a little science fictional. While any pivoting on Google’s part is purely hypothetical, Yahoo earlier this week announced a restructuring, focusing on so-called “commerce” solutions. Yahoo, by and large, is a company in search of a market: Google and Microsoft have the search market locked down pretty tight, and healthy companies don’t lay off 2,000 workers.
If Google can’t or won’t support Google Apps anymore, maybe it should sell it to Yahoo, a company with a proven infrastructure and expertise in managing SaaS applications. Yahoo could use the customers, the brand still has at least a little cachet, and one of the pioneers of the modern Internet could find a second life as an enterprise SaaS provider, though it could maintain the search engine if it really wanted to. The technology and approach would live on, but Google could keep developing AdWords and Google+ without having to support that part of its business.
But enough speculation. For right now, suffice it to say that it’s worth keeping a close eye on Google Apps from here on out. Something’s up at the Googleplex, and in the wake of Girouard’s departure, these swirling rumors around pivoting back towards the consumer, and Google Apps’ conspicuous absence from the spotlight on the earnings call, Google has a lot to prove.