India is only market where we have special pricing: Google’s Sood
Google Apps and Enterprise Search managing director believes his company is making good progress in the enterprise segment
Mumbai: Google Inc. may be a household name because of its ubiquitous search engine but it is much smaller than companies like Amazon Web Services Inc. and Microsoft Corp. when one looks at the revenue it gets from businesses, or the enterprise segment. Rahul Sood, managing director of Google Apps and Enterprise Search, believes his company is making good progress in this space. In an interview on 18 July, he said Google will continue to invest in its enterprise space, one of its largest investments outside of traditional online advertising that still accounts for over 90% of Google’s total revenue. The company, he added, will ride on the popularity of Hangouts and Drive, and focus on under-penetrated areas like videoconferencing and storage and moving businesses to the cloud. Edited excerpts:
Google is better known as a search engine that makes billions of dollars from online advertising, rather than one that provides solutions to companies...
Google has been in the enterprise technology business for almost 10 years. It is one of the few businesses that we have invested in outside of the traditional advertising model.
We have revealed some indicative numbers, like 5 million businesses worldwide run on apps, more than 70 of the top US universities run on apps, etc. (He did not provide a break-up of the enterprise revenue). And we have 600 large organizations with more than 10,000 users.
There are three kinds of things we do in enterprise: services, devices and platforms.
We sell Google apps—a productivity tool, geo-services, geo-mapping and search as a service—too. The second business is devices, where we have Chromebook and Android phones. We have been present with Chromebooks for longer, Android is still fairly new. We announced last week that this year we reached 1 million units of Chromebooks, most of it sold to educational institutes.
With Android, we are just getting into the enterprise space. Businesses and consumers have brought Android phones and devices into business already. Going forward, if you take your phone to work, your IT department will be able to keep all the work applications separate from consumer applications. So far, every OEM (original equipment manufacturer) has had their own approach (eg. BlackBerry Balance and Samsung Knox). We want to consolidate that into one approach.
With the Chrome technology, we are taking Chrome OS to special-purpose devices. We recently launched the Chromebooks for meetings, a videoconferencing kit. For $1,000, you can convert any room into a videoconference-enabled room. Video in the enterprise has very low adoption as it is very expensive. If you look at the world, less than 5% of the conference rooms are video-enabled. Less than 50 million users worldwide have a video service that they subscribe to.
We also have a cloud platform, which we started offering as a business service three to four years ago, but we have been building a cloud-based infrastructure ever since Google started.
But cloud is a highly competitive space, and you are a late entrant...
You need to segment the market. When you look at the cloud platform, we came late as compared to Amazon (Amazon Web Services’ platform as a service). We have some work cut out for us and we need to innovate fast. Amazon has been around longer but it is a matter of time before that dynamic will change.
On the productivity services and app side, we were among the first ones to have launched it. Microsoft came in much later. As long as you have a really compelling proposition, customers will figure out a way. There are many customers who are looking at us as an addition, if not a replacement. Competition is always good in the market, but customers have somehow understood how to handle lock-ins in the market. But if you look at technology in general, lock-ins (compared to open source technologies that can run on any platform) don’t last.
Many customers store office format files in our drives. Files and videos are very underpenetrated and we are trying to be the preferred vendor having the best technology.
One of the big pushes we have this year is to start promoting the idea of users replacing the Microsoft stack with products like Drive and Hangouts.
We are trying to do two things, for customers who want a full platform can move to ours, and for customers who are not looking for an entire platform right away but are looking for entry points. We think in the next five years, everyone should be using videos, as bandwidth prices drop. Also, all devices should have a camera by then.
Can you tell us about your enterprise business plans in India?
India is a very strategic market. We started investing in India very early on. It is the only market where we have special pricing. Customers want the same thing. Their users are asking for a similar experience and are going for changes in the way things work.
There are a few things that are unique about India: we see it having much more mobile penetration. We also see the demographic changing; the Indian worker is much younger than the rest of world. If you look at it, initially a lot of our users were Gmail centric, they would start with Gmail and then move to Google docs. If you look at the last couple of quarters, the conversations are more around Drive and Hangouts.
Can you take us through the India figures?
Our business, especially the small end of our business, has seen a 70% growth year on year. These are really high growth rates and we see acceleration in that. We haven’t seen the full impact of the India pricing which we announced recently, and we expect more acceleration.
Are you having a dialogue with the Indian government?
There are many areas where we are having a dialogue with the government. Chromebook is definitely one of these. We see a lot of adoption and interest there. One of the things that happen with hardware is that it takes a little while before getting the logistics running. We are heading the offline way and in India, educational institutions are leading the adoption.
Is the adoption process of cloud taking more time due to security reasons?
I think we are still at a stage where we need to educate the market on security. And we are investing very heavily in that. The attitude to security has changed—people realize that in many ways, the cloud service is secure. If you look at compliance and certifications, we have gone through it and done a lot from a product investment and a customer education perspective.
Moving to cloud is not a compromise, but it actually improves security. Indian customers are more progressive, and Indian businesses are experiencing substantial growth compared to their international peers.
So, they have to think about flexibility of operations and growth. That forces Indian clients to be looking for more solutions when compared to its international clients. Emerging markets is where we see growth coming from, such as Brazil, India, and Indonesia.
International Business Machines Corp. (IBM) recently inked a deal with Apple Inc., partly triggered by the BYOD (bring your own device) phenomenon, to encourage use of iPhones and iPads in companies. Analysts see this posing a threat to your ambitions in the enterprise space...
Largely, the success of Google apps in the enterprise is because of its consumer services. When you talk about BYOD, the fundamental meaning of BYOD is you as a user decide what you like to use. What we are seeing is, in lots of instances, both large and small, that customers like this service and promote it in their company, and encourage their company to go to Google. People want the same experience they get at home, at work. And this is called consumerization of IT.
We are uniquely positioned to do that as we have one of the biggest cloud spaces in the consumer side, whether it is Gmail, YouTube or Google maps.
And that’s what is really helping us in the enterprise. And they also have some more requirements like security, compliance, privacy and those are things we have been investing in heavily.
What kind of synergies are you building with Android? Do you see low-cost devices being adopted in companies too?
We have not seen a strong correlation between cost and enterprise usage. In emerging markets especially, the adoption of some of our services like drive are really high, like in India and Brazil. And one of our hypotheses is that these are markets that are more mobile centric.
You have a very strong developer community…
With Chrome and Android, we have a very strong developer community. I think on the app side we make conscious decision that Google will not build all the services you need to operate, we will not build a CRM (customer relationship management) system or a financial application. Embedding our applications in other applications is the key. We have a Google app marketplace where our customers can buy our products.
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First Published:24 Jul 2014, 11:49 PM IST
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