In the case of Genentech, this means taken care of by Google. Google relies on the “freemium” business model used by most providers of software as a service (including Box.net), in which a stripped-down freebie version lures in the curious for a risk-free test drive, while a premium pay-as-you-go version offers more bells and whistles, like additional storage capacity and customer support. The free Google Apps Standard Edition suite includes Gmail, Google Calendar, Google Docs (for creating and sharing documents, spreadsheets, and presentations), Google Sites (for creating secure Web pages for intranet and team-managed sites), and Google Talk (for instant messaging). An estimated 37 million people worldwide take advantage of Gmail’s generous seven gigabytes of storage, its killer spam filtering, and a nifty plug-in that lets you read and write e-mail while offline, then send it once you’re connected again. Genentech and an undisclosed number of other companies subscribe to Google Apps Premier Edition, the company’s top-of-the-line cloud service, which includes all the above plus such extras as a practically bottomless 25 gigs of Gmail storage per employee and 99.9% guaranteed uptime, along with additional cool tools like Google Video (private, secure hosted video sharing, for things like employee training and sales pitches).
Some two million businesses subscribe to Premier Edition, Google claims, each having forked over $50 per year to upgrade service for an undisclosed number of employees. (Hundreds of universities and nonprofits use a customized free or discounted version.) Directors thinking about costs would do well to compare that per-person sum with the average $400 per employee a company pays to use Microsoft’s Office Standard 2007 desktop suite, plus another $110 or so for an Outlook e-mail and calendaring program. And as Pierce points out, Google’s corporate e-mail customers no longer have to deal with backing up data for disaster recovery, which saves millions of dollars.
Google doesn’t disclose the identity of all its corporate customers, but it has won several high-profile contests to get new ones. It beat out Microsoft in October after a yearlong fight, snaring a $7.25 million, five-year contract to provide a new e-mail system for the city of Los Angeles and its 30,000 employees, about 10,000 of them cops.
Microsoft’s competitive position needs work. In mid-2007 it launched Microsoft Office Live Workspace, a Web-based set of document creation and sharing tools that can be accessed for free via a Microsoft Live account (or a preexisting Hotmail account). Unfortunately, reviewers and armchair critics found the tools balky to use with non-Microsoft browsers, and few people seem to be bothering with them. The upcoming Office 2010 will offer cloud-based versions of Word, Excel, and PowerPoint, but many analysts think Google Apps will have established a solid lead by then. This doesn’t mean that companies won’t buy the Office upgrade anyway, of course. There are a lot of Microsoft customers out there, and Microsoft’s business division, for which Office provides the lion’s share of sales, generated revenue of $4.4 billion for the quarter that ended in September.
Some companies are trying to escape Microsoft’s clutches. Seymour Duncker, the founder and CEO of iCharts, a Web-services start-up headquartered in Sunnyvale, California, that simplifies online data publishing and distribution, says he has “kicked the Microsoft habit completely.” Make that almost completely. His lean-and-mean team of 20 people spread throughout California, Germany, and India all utilize free services. They use the free versions of Gmail for e-mail and Google Apps to track product-development timelines, record call minutes, and manage sales leads. For cheap telecommunications and free one-to-one videoconferencing, they turn to Skype, a global Internet-communications company partly owned by eBay. Microsoft’s last grip on iCharts: its PowerPoint and Excel programs. “We still use PowerPoint to create presentations and Excel to download our Google Apps spreadsheets into offline. There’s really no replacement yet,” says Duncker with a sigh.
As directors of companies that have switched to Google Premier Edition will know, the real savings come not from forgoing Microsoft Outlook licenses but from getting out of e-mail management entirely. Simple on the surface, e-mail has lots of hidden costs attached. Cloud-based e-mail means no more five-figure purchases of Microsoft Exchange e-mail servers that have to be installed inside the company firewall, not to mention the endless IT staff hours spent maintaining and updating those servers and their software—chasing viruses, backing up terabytes of sensitive company data, telling packrat mail savers it’s time to clean out their in-boxes.
Continued...