What's Holding Back Google Apps?
The search giant aims to compete in business software with Google Apps. But some clients fret over storing data on its servers—and its rivals are big — When Google (GOOG) announced a foray into business software two years ago, it touted General Electric (GE) as one of its trophy accounts.
Context & Ripple Effects
Two years into its push into business software, Google still leans on marquee names — General Electric among them — to sell Google Apps, but Business Week's reporting finds confirmed client unease over storing corporate data on Google's servers. That trust gap echoes an earlier verdict: a 2007 InfoWorld assessment found Google Apps no match for Microsoft Office, and Google has been fighting on two fronts since, having also launched business search that year as part of a broader wave that included Apple taking aim at Office.
First-order effects
- Corporate buyers considering Google Apps must resolve a data-custody question before any feature comparison matters — confirmed client concerns about information living on Google's servers stall deals regardless of price.
- Google carries the burden of proof against a rival whose suite is already installed everywhere; every enterprise pitch starts by explaining why Office should be displaced, not whether Apps works.
Second-order effects
- Microsoft's cheapest competitive response is to amplify the trust argument rather than match Apps on price — defending the installed base by framing local storage as a control advantage.
- To convert skeptics, Google must invest in enterprise-grade assurance around its hosting, raising its cost per seat and stretching the timeline on which Apps can show real revenue traction.
Third-order effects
- If the custody concern persists, enterprise software bifurcates: lightweight collaboration drifts toward hosted services while regulated or sensitive workloads stay in licensed desktop suites — forcing SaaS vendors to build certification and control features as table stakes rather than differentiators.
The trend: Enterprise software is migrating from licensed desktop suites toward hosted services, with customer trust in third-party data storage setting the pace of adoption.