Google boosts corporate e-mail service
SAN FRANCISCO - Google Inc. is sprucing up its corporate e-mail service by adding new security tools and more than doubling the storage capacity of e-mailboxes, underscoring the online search leader's ambition to enlarge its role in the business software market.
Context & Ripple Effects
Google's move builds directly on its July 2007 acquisition of an e-mail security and management firm (Google Buys a Manager of E-Mail): the new security tools now landing in the corporate e-mail product are the payoff from that deal being folded into the offering. The company is pairing that with more than doubled mailbox capacity, per the confirmed details reported on October 3, 2007.
The stakes are Google's stated ambition to enlarge its role in business software — a market where Microsoft's Exchange and Office franchises set the incumbent standard. Upgrading a free-consumer product into a hardened corporate service is how Google converts consumer scale into an enterprise sales pitch.
First-order effects
- Corporate customers evaluating hosted e-mail immediately get a stronger package: bigger mailboxes and added security tooling at Google's price point, straight against Microsoft Exchange deployments.
- Google's July e-mail-management acquisition becomes revenue-relevant, since its technology now differentiates the corporate tier rather than sitting idle.
Second-order effects
- Microsoft and IBM face pricing and feature pressure in the mid-market, where hosted e-mail undercuts the cost of running on-premise Exchange or Domino servers.
- IT buyers gain a credible second option, forcing resellers and systems integrators who live on Exchange installations to reposition toward managing hosted services instead.
Third-order effects
- If the pattern holds, business software shifts from licensed, server-based products toward web-hosted services priced like utilities — with storage capacity becoming a competitive weapon rather than a cost line.
- Search-driven companies entering enterprise software establish a template other consumer-web firms would follow, eroding the boundary between advertising-funded consumer products and paid corporate software.
The trend: Business software is migrating from licensed on-premise suites to hosted web services, with Google using consumer-scale infrastructure and targeted acquisitions to attack Microsoft's enterprise franchise.