The Google Apps Appliance would make Microsoft sweat

Out of all other Google services, Google Apps is the product with the most potential to put a dent in Microsoft's earnings if it ever took off. As we've seen in the recent past, both companies will do almost anything to one-up the other -- and that should worry Microsoft.

Given Google's dominance over Microsoft in the search space, it's strange to think of them as "the little guy" in the enterprise. Since Microsoft is so far in the lead, they don't Google seriously -- that could be a problem.

According to Bill Gates, the enterprise is a beast only they know how to tame:

"[Google Sites doesn't] understand the special needs of business" ... "If you'd seen what the Google tools that have tried to do productivity type things, they really don't have the richness, the responsiveness," he said, later adding, "for most of these Google products, to be frank, the day they announce them is their best day."

Google has been throwing pebbles (Google Sites, Google Apps Team Edition, and Postini), but there could be one boulder in their arsenal they are just waiting to hurl -- the Google Apps Appliance. Google already has an "appliance" for the enterprise, but the only thing it does right now is search. The Google Apps Appliance could be an upgrade to that, or something completely new that is designed to plug right into your existing IT infrastructure. This could be the enterprise home run they have been looking for.

The main reason Microsoft products are consistently chosen over switching to Google Apps is because most companies, of all sizes, don't trust anyone with their data but themselves -- and rightly so. Google has two options:

1. try and convince people that their most private information is safe behind their doors, or
2. start swimming downstream by offering a hardware solution that users control

It will be easier for Google to shift it's enterprise strategy than shifting the minds of potential customers when it comes to privacy.

Launching the Google Apps Appliance will put Google on a level playing field with Microsoft -- and the lower price-point of Google services will look more attractive than ever before. Microsoft will either be forced to reduce their price to compete, or lose some customers. Both will negatively impact their earnings.