Google's attempt to push its online applications to businesses by deepening its relationship with CRM specialist Salesforce.com attracted a lot of interest recently, but it's still not clear how many companies are prepared to trust their mission-critical data to hosted applications.
The two companies first teamed up in June last year when they jointly launched Salesforce Group Edition. The deal enabled Salesforce customers to display their adverts on Google.com when relevant search terms were entered onto the site and to distribute advertisements using Google AdWords.
But the partnership was taken a step further earlier this month, with Salesforce integrating its CRM software with various Google offerings including Google Apps, Gmail, Google Calendar and Google Talk instant-messaging (IM) packages.
Google email or IM messages can now be added to Salesforce CRM-based records and, from Google's point of view, the move is clearly intended to boost uptake of its services by businesses.
While the basic service is free, organisations looking for more functionality can sign up to Google Apps Premier Edition at a cost of about £5 per user, per day. This attempt to woo paying business users is important, according to Tom Austin, head of software research at Gartner, as Google could be at risk of entering into "an era of profitless prosperity".
"[With] everything Google does for free, where does it make its money? About 98.5 percent of it comes from advertising at the moment, but I'm reasonably sure that Google doesn't get much ad revenues from Gmail and Google Apps, although a lot of people use them," Austin said.
Instead, the company still makes the majority of its money from keyword searches which, according to David Card, a senior analyst at JupiterResearch, means that "it's still pretty much a one-trick pony" — one that presumably, over time, will need to broaden its revenue base to maintain growth.
In the short term, at least, Austin said he does not expect Google's hosted productivity applications to replace Microsoft's equivalent, paid-for offerings, such as Office. "We see them co-existing. People will wind up using both. In many cases, that's already happening, but not via enterprise purchases. It's via the independent actions of individual users and groups of users," he said.
A Gartner survey that was undertaken in March and is due to be published this quarter indicates that, although Microsoft's collaboration and workplace technologies are used by about 89 percent of the 360 enterprises questioned, three other vendors more or less share second place as supporting players: Google, which has 50 percent penetration; Cisco, which has 51 percent; and IBM, with 48 percent.
About six percent of IT staff surveyed use some form of Google application at least hourly, while 33 percent do so at least once a day. This, said Austin, indicates that there is already "a surprising degree of penetration — as a secondary application, supplementing, not replacing but competing for usage cycles with Microsoft Office".
On the basis that "Google is succeeding via the actions of users not IT managers", Austin said he expects that, within five years, "a majority of enterprise users will use some Google apps for work purposes, whether IT endorses it or not".
Most IT departments are not ready to sign up for offerings such as Google Apps Premier Edition just yet, even though they are aware that personnel are using Google Apps and Gmail on the job, added Austin.
However, although the number of informal users of such services is set to continue growing, Austin was also not convinced that, in the majority of cases, this will result in...