Unravelling Google's financials is an exercise in futility. First there is only a limited breakout of information relating to each part of the business, second different reports are difficult to parse when taken in aggregate. Finally, Google's growth makes it hard to track each element with any degree of certainty.
When Google launched Sites, Dan Farber suggested:
Google Apps has some traction--about 500,000 companies are using the suite--but the non-tech-savvy knowledge worker may not by aware of Google Docs, according to Glotzbach. Google is relying on word of mouth to stimulate small business usage and more direct selling into larger enterprises
Meanwhile, Mike Arrington, in a different interview but around the same time said:
Google Apps and Google Docs, which now account, according to analysts, for up to 2-3% of Google’s total revenue (call it $400m a year, up from $40m a year ago) (note: I can’t find a source for this, but it was quoted to me by a senior Google employee last week).
Assuming what Arrington was told is broadly correct then, based on Google's last reported financials, that's somewhere between $331 million and $498 million. If you then take Dan's figure and do a simple division against Arrington's numbers you end up with something between $66-99 for every one of those users. That's not possible when Apps costs $50 per person and you can bet a significant number of those people are using the free version. I wonder what's going on?
Business Week, the original source for the $40 million figure reckoned at the time Google had some 100,000 users for its Apps. If we're to get close to Arrington's $400 million, then the user count must be closer to 1 million.
Google isn't confirming or denying, but to have achieved that level of traction in such a short period is astonishing when compared to say Salesforce.com. In its blowout fourth quarter, Salesforce.com reported that: "Net paying subscribers rose to nearly 1.1 million, an increase of more than 450,000 year over year."
Whatever Google's numbers - and next time around it would be good to have a proper breakdown - they're clearly making inroads into Microsoft's turf. All of which is leading to Mix. David Greenfield thinks that's where Microsoft will announce its entry into the SaaS market. Or it could come at Convergence. Regardless, there's little doubting that SaaS 'office' players like Zoho will see their early entry to the market validated by such a move. The stage is set for an interesting battle but in the meantime, I'd really like to get more clarity on the real numbers Google is making both in absolute dollar amounts and the acquired customer count.