Google launches reseller scheme for apps

 

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By Reuters

Posted on 14 Jan 2009 at 11:52

Google has recruited IT resellers to market its web-based applications to business clients.

The deal means that from the end of March, authorised resellers will be able to sell, customise and support premium versions of Google Apps with their products.

IT resellers typically sell services such as web hosting, setting up servers and backing up data, as well as software to hundreds of thousands of end user businesses of all sizes.

Click here for the PC Pro verdict on Google Apps for business

Since it launched Google Apps in February 2007, Google has only sold directly to business users over the internet. Analysts say the move to work with third parties is necessary if Google hopes to compete seriously with Microsoft or IBM.

Microsoft, which is the world's largest software company, sells more than 95% of its software through more than 440,000 third party resellers, according to Gartner Research, and intends to spend around $3 billion on managing those sales channels in 2009.

By comparison Google has so far only dipped its toe in the water, but sees a great opportunity after running trials with more than 50 resellers in 25 countries. It also has a 9-month old relationship with Salesforce.com.

"We feel that Google has had limited success in winning customers with a singular sales channel," says Tiffani Bova, an analyst at Gartner Research, who estimates Google has around 200,000 Premier customers.

To win over new resellers, Google says partners will buy the Premier Edition at a 20% discount and keep the recurring revenue for the lifetime of their customer relationship.

The search leader already offers a basic package of Google Apps for free to consumers, prompting some industry watchers to see it as a major threat to Microsoft's profitable "Office" business.

But Rebecca Wettemann, an analyst at Nucleus Research, said Google is a long way from hurting Microsoft.

"We've seen in the applications space that Google is a strong email competitor, but so far it is only a complement to Office not yet a replacement."

Google's move to offer applications is part of a wider drive to diversify its revenue base, which has been completely dominated by hugely profitable search advertising technology.

As the advertising market comes under pressure from a slowing global economy, investors will likely be paying more attention to Google's small but growing businesses.