Phil Sim

Web, media, PR and… footy

The REAL Google strategy

Helloooo! Yes, you. Look over here. Instead of obsessing with all of these half-baked consumer-oriented Web 2.0 plays. Instead of dissecting all of these increasingly mundane enterprise ERP takeovers, will somebody start paying attention to where the real action is – small to medium business. It a move that barely raised a wrinkle in the blogosphere, Microsoft started taking the wraps off Office Live today. Joe Wilcox of the Microsoft Monitor Weblog was first out there with the news, but noted that MS lifted the NDA early. There is a definite sense of urgency at play here.

Is there any wonder? Let me pull a couple more posts from the Wilcox piece:

About half of Microsoft revenue comes from SMBs, yet the company’s product penetration is nowhere near as great as enterprises.

Get that? Half of Microsoft’s revenues. Yet it’s still a growth market! Let’s face it, a lot of SMBs use pirated software. Secondly, few SMBs can afford dedicated technical people so they tend to use as little technology as possible. The e-business revolution hasn’t even started in this sector!

Hosted, powerful Web 2.0 style applications are just made for this market. Have a look at the success that Salesforce.com is having in this sector.

So you have a market that is absolutely massive. You have a market where technology is right now set to hits the sweet spot. And yet, every Web 2.0 bozo wants to launch a consumer plays??

The urgency with which Microsoft appears to be re-wrangling itself around Office Live suggest to me that MS get it. This market can go either way for them. It can be a huge growth market or it can help tank their business.

But as I’ve said in numerous posts this month, I think Google get it too. Let’s take a look at what Microsoft is going to offer via Office Live and then see how Google has or will respond.

Office Live Basics: Free e-mail accounts under your domain. Google: Just this past week, went into beta with its own equivalent.
Office Live Basics: Website with a drag and drop design tool. The Valleywag blog revealed that Google was building an Ajax website editor called trogdor. Also said a GMail calendar was on the way, which would bring it up to par with the latest Microsoft Live Mail.
Office Live Basics: Microsoft Office Live Site Reports. Not only do we have Google Analytics, we’ve now got MeasureMap.
Office Live Collaboration: Includes CRM, sales and marketing management, collaboration and project management tools. Google. Nada.

Yet.

Have a read of this fascinating story from CRMBuyer. The story notes that towards the end of November, Google went nuts hiring up CRM skills. Note that’s about a month after Microsoft announced where it was going with Office Live. The other really interesting facet of that story was this par:

In the test driving I’ve been doing of Google Analytics, the most useful feature is the opportunity to parse site metrics by the three roles of Executive, Marketer and Webmaster. Included in the roles are goal-seeking guidance based on site analytics. There is also support for Marketing and Content Optimization. When Google brings out CRM expect to see multiple roles or views of customer data and the opportunity to upload various CRM-specific file formats.

People have questioned why Google needed to acquire Measure Map. To me, this is the obvious answer. Analytics will be at the heart of Google’s SMB offering. Let’s remember what Google’s core business is. It’s selling advertising. Who is it’s core customer base. SMB’s for whom contextual advertising finally represents a cost-effective marketing mechanism. How much penetration do you reckon Google has into this market. Bugger all. How can Google most effectively increase it’s core revenue. By getting more SMBs to do more contextual advertising. How can they do this? By helping SMBs to understand the effectiveness of electronic sales and marketing. How can they do this? By offering SMBs free CRM and marketing analytics.

I’ve studied this market pretty closely because I run an SMB and went looking for a solution. NetSuite is by far the most advanced solution. Why? It’s not just CRM. It’s ERP for SMBs. And it’s the e-marketing stuff that’s coolest. You can build a website, that’s based on your real-time inventory, which in turn ties to your CRM and accounts. So you enter a new product into your system, instantly put it up for sale on your website, someone clicks on that product and requests more information which feeds the lead through to your CRM system for actioning.

Okay, with regard to Google. Let’s bring GoogleBase into play, now. You submit your product catalogue to GoogleBase and at the same time publish it to your website via the new website builder. You check into your website analytics and note which keywords are working well on Google for your product and so decide to take up some more advertising on those keywords. Your sales guys are talking to customers all over the world via their GoogleTalk VoIP, which of course is automatically logging the information into your CRM system. Meanwhile, you make a few clicks to find out how your latest print and radio campaigns that you also bought through Google are faring before you decide whether to tweak those. Pop back into CRM and check out your big fat sales pipeline. Happy days!

Microsoft is going to attack the SMB market from the perspective that it understands. Applications, server software and selling its own ad inventory. If I’m right Google will come to the market from its core strength, which when you get down to it is helping SMBs do sales and marketing. This market has made it one of the biggest companies in the globe, but its a market that has barely had the cover scraped off it, because SMB’s don’t get tech, aren’t very good marketers and certainly don’t get the intersection of tech and advertising. That’s why this has to be Google’s number one priority.

If I’m right then Microsoft should be shit scared. The Joe Wilcox article I referenced earlier said:

“Google isn’t the target here and, in many respects, neither is the nebulous Web 2.0 concept. As I wrote back in November, “Microsoft hopes to generate greater customer valueand make new-version Office and Windows upgrades more appealing. Microsoft is probably more concerned about a Salesforce.com than a Google here. Microsoft’s core business is applications and operating systems. Services like Salesforce.com negate the value of both applications and operating systems, territory Microsoft won’t easily cede. It’s no coincidence that CRM is a major Office Live feature.”

The problem for Microsoft is that while it may not be targeting Google I think it’s become pretty apparent that Google is targeting it – hence the Office Live copycat game. Google needs to reinvent how SMBs do business and the biggest barrier to them doing that is to getting smaller businesses thinking outside of the Microsoft Office mentality. Microsoft wants to use Live to further suck them into that technological mindset, Google needs them to think differently.

If I’m right with all this then just consider this. What’s the Microsoft “offer”: Spend more money on software or else read out ads. The payback: Be more productive. What’s the Google “offer”. Spend no money on software, spend it on marketing instead and generate more revenue.

To me, that’s what Google represents. Technology won’t be all about increasing productivity – we’ve solved that problem – it’s now about making more money. It’s been that way in the enterprise game for quite some time now (how many enterprises over the last five years haven’t been pouring the bulk of their IT budgets into CRM initiatives) now it’s time for the smaller end of town to follow suit and Google’s got the game to get them there.

Filed under: Google

12 Responses

  1. Al says:

    Nice analysis and some good background, but the other point I think is that what Microsoft seems to be offering with Office live doesn’t meet initial expectations, in fact it sucks from our point of view. I think they are afraid to canabilise their existing revenue models hence the only for miocro business tags etc..

    regards
    Al

  2. john says:

    Very interesting analysis and I agree about the SME/SMB market as being a massive growth area in the services area. I think the reason it doesn’t get much coverage by blogs is it isn’t ‘cool’ enough, whereas the next meaningless Web 2.0 service/application is! It is amazing to think that, as you say, whilst the SMB market provides 50% of MS’s revenue (christ knows what figure that equates to…) there is still plenty of growth potential in the market itself.

  3. D. B. says:

    A CRM analyst once said that Microsoft should buy RightNow Technologies. Not a good fit since RightNow is a hosted implementation that uses a lot of OpenSource: MySQL, Linux, PHP, Python… There are lots of good SMB CRM implementations out there. If Google were serious about quickly getting into CRM they should consider intergration with or acquisition of proven solutions rather coding everything from scratch.

  4. /pd says:

    Good analysis. Question in play wrt crm- when ??

  5. Caitlin says:

    Hi Phil,
    Just came across your blog and wanted to say hi. Hi.
    Caitlin

  6. 59ideas says:

    The other group of people that should also be thinking hard are the small companies targeting SME. If MS and Google is eating into their pie, they better find more pie or eat faster.

    The tech game is geting tougher for the small guys. No wonder many tech people are I know are now selling food.

  7. I met with Microsoft a couple of weeks back.
    They no longer refer to selling software to small businesses.
    The phrase they used repeatedly was “getting behind small business.”
    It does not take much imagination to extrapolate that little phrase into something rather unpleasant, does it?

  8. Victor Luan says:

    Good analysis. I agree about the SME market as being a massive growth area, especially like Goolge. Technology as Google’s born per se, and marketing it’s CRM as Google’s muscle. Generate more source of revenue generation seems like the most important task for Google’s agressive growth.

  9. […] observation by Phil Sim on Squash – follow the money trail and you’ll see that Google’s real customers are the small […]

  10. Madison says:

    Does not give u info on sacquash or if he is real.

  11. […] Wagon Trainer Phil Sim thinks it’s about finding a growth area and awaits Google’s […]

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