By Eric Auchard
Google Inc. is making a concerted move beyond search and advertising
into the business software market, starting with a set of Web programs
for e-mail, scheduling and communications, it said on Sunday.
The online search leader said it has created a software platform to run
basic business activities -- based on programs it already offers
separately. The move marks a stepped up challenge to rival Microsoft
Corp. as the software giant prepares to upgrade its Windows and Office
The free set of Web-based programs for small businesses, universities
and nonprofit businesses goes by the mouthful "Google Apps for Your
Later this year, Google said it will offer a "paid, premium" version
with the option of being ad-free and more administrative control and
compliance features to meet the demands of bigger corporations and
government agencies. Pricing for this more advanced version is not yet
available, it said.
Google will host the applications relieving companies of the need to
maintain or install software on individual PCs -- support tasks often
more costly than software itself.
"If we do it right, we get the best of both worlds -- very
consumer-friendly software, but also low-cost business applications,"
said Dave Girouard, general manager of Google's enterprise division,
which sells search software to companies.
Individual office workers can sign on to Google Apps -- short for
applications -- through their Web browsers.
Initial apps are Gmail Web e-mail, the Google Talk instant message and
Web phone-calling service, group scheduling on Google Calendar, and
Google Page Creator for Web page design.
"It really is intended to be a platform," Girouard said.
"One of the fundamental benefits of the software as service approach
is that you can just turn on new features over time." The Writely word
processor and Google Spreadsheet are candidates for future inclusion
in Google Apps, Girouard said.
Google's main appeal is to consumers of its popular Web search and
advertising systems. By packaging a set of software for businesses,
Google is responding to demands by corporate network administrators
who prefer to manage a standard set of software inside
organizations. Many are cracking down on the spread of individual
consumer programs within their networks.
Sue Feldman, an analyst with market research firm IDC, said Google
Apps moves the company into open competition with Microsoft in the
business software market.
Anticipating Google's moves, the world's biggest software maker has
responded with Windows "Live" -- Web-based software for small business
and consumers. But Microsoft's unwillingness to deliver its software
until it is "fully baked" gives Google an opening to win adherents to
its approach, the analyst said.
"There is simplicity and there is s-i-m-p-l-i-c-i-t-y," Feldman said.
"If you are used to using Microsoft Outlook, you may need many more
features and you will want to use them whether you are connected to
the Internet or offline."
Martin Pyykkonen, an analyst with Global Crown Capital of San
Francisco, says Google's bid to host business software may give pause
to companies mulling when to upgrade to new versions of Microsoft
Windows, Office and Outlook due in the next year.
"For all the complexity of Microsoft software and how long Vista has
taken, a lot of corporate executives are going to be wary: Do you update
to the complexity of Vista or would you be better off just using
something simple like Google Apps?" he said.
Vista, the first major upgrade of Windows in five years, is due out
later this year or early next.
IBM, Oracle Corp. and SAP AG also are racing to offer their software
as Web-based services in order to make it easier to use and to cut
costs, following the lead of pioneer Salesforce.com. Google's latest
move makes them both competitors and potential partners.
Girouard underscored that the Google Apps platform is not designed to
replace Microsoft's core software. Many businesses are likely to run
Windows and Office programs alongside Google Apps on office workers'
computers, he said.
"This platform isn't by any means an alternative to Windows," Girouard
said. "We are not really out there to eliminate any applications. We are
looking to introduce new ways to solve problems people have been having
"There is a lot of open territory," he said.
Copyright 2006 Reuters Limited.
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