Google Apps: A $1 Billion Business?


Google has never gone on record to say how much revenue is driven by its Google Apps cloud collaboration and communication suite, but recent research performed by Google ISV Backupify found that Google Apps could be on the verge of becoming a $1 billion business.

Backupify, which offers a Google Apps backup service in the Google Apps Marketplace, recently launched an investigation to get the lowdown on what type of companies are actually using Google Apps. The company surveyed 8,000 Google Apps domains, comprising roughly half a million Google Apps users.

According to a blog post from Backupify CEO Rob May, the data was culled from businesses that signed up for Backupify's Google Apps backup offering or its Google Apps account download tool called Snapshot. May noted that the sample is not random, and skews toward domains with at least 30 users.

Backupify estimated that Google Apps has 50 million total users and that roughly 30 million of those business users pay for Google Apps, as opposed to using the free version. At that rate, Google Apps is close to the $1 billion revenue mark.

"If that's the case, Google Apps should be closing in on a billion dollar annual revenue run rate," May wrote after analyzing Google user data.

According to Backupify's findings, the majority of the domains using Google Apps are small, with 53 percent of businesses having 10 seats or less. That means more than half of the survey pool is using the free version of Google Apps, May wrote.

However, Backupify's research revealed that bigger deployments drive revenue and seats on Google Apps. May wrote that businesses with more than 10,000 seats make up 0.33 percent of the domains and represent 54 percent of the seats. And when educational institutions, which also get Google Apps for free, are removed, 0.22 percent of the domains have more than 10,000 seats and drive about 40 percent of all Google Apps seats.

Overall, Backupify's data revealed, 93.9 percent of the seats on Google Apps are used by 15.4 percent of the companies. Backupify also found that California represents the state with the most Google Apps deployments at 17 percent. Meanwhile, the top job function of a Google Apps buyer is president, CEO or owner at 43 percent, or IT staff at 33 percent.

Backupify's data also found that Google's average deal size is growing. And Google recently said that it is tweaking its channel program to bring more and bigger deals to partners.

Google Apps as a $1 billion business goes against recent estimates by research firm Gartner, which in November 2011 said that Google had managed to realize $136.6 million in revenue from Google Apps for the nine months ended Sept. 30, 2011. Gartner estimated that Google Apps is about 0.5 percent of Google's overall revenue.

But in its fourth quarter earnings call last month, Google highlighted Google Apps' growth, noting that it is gaining traction and that Google is infiltrating the enterprise with its cloud offerings.

"[W]e are seeing great traction in our Enterprise business, both with large partners, who tend to be early adopters and future looking, and in many small businesses who see Google Apps as a comprehensive and quick solution. We now have more than 5,000 customers signing up to Google Apps every day," said Nikesh Arora, Google chief business officer and senior vice president, during Google's earnings call.