Google, which makes the vast majority of its revenue from advertising, is now stepping up investment in its enterprise business.
More than half of Fortune 500 companies are paying for Google enterprise products, and some 5 million companies are using Google Apps for Business, Nikesh Arora, senior vice president and chief business officer, said Thursday during Google's second-quarter earnings call, according to a transcript from Seeking Alpha.
Google doesn't break out its enterprise revenue separately, but it's believed to account for about 5 percent of its overall business. Arora described enterprise as "another great revenue stream for Google."
Google's enterprise business consists of productivity apps like Google Docs and Gmail and the Google Cloud Platform, which includes its App Engine platform-as-a-service and its Compute Engine infrastructure-as-a-service.
Other products include the Google Search Appliance and GeoSpatial Solutions, which companies use to build apps that include Google Maps.
There's lots of room for Google to grow in the enterprise, but the company, in previous earnings calls, hasn't talked much about this business. Google partners who've been fighting Microsoft and others on the front lines of the enterprise market are hoping this translates into more resources and support.
"Part of me says it's about time," Allen Falcon, CEO of Cumulus Global, a Westbourough, Mass.-based Google partner, told CRN. "Enterprise is strategic for us, so it's good to see it is strategic for Google, too."
"Google's enterprise business has crossed the threshold from a startup organization to a fairly large team," Doug Shepard, president of the Google business at Cloud Sherpas, an Atlanta-based Google partner, told CRN.
Cumulus Global sells Google Apps to small and medium-sized businesses and local government agencies, and Falcon says his Google Apps sales have been doubling for the past several years. In the past six months, Cumulus Global has also been selling managed file services using Google Drive.
Falcon says he's been getting calls from Zimbra customers looking to switch to Google Apps. VMware earlier this week sold Zimbra, which makes a suite of SaaS apps that compete in some ways with Office, to Telligent, a Dallas-based enterprise collaboration vendor.
Google's deepening ties with HP could also help it crack into more enterprise accounts. HP is selling a Chromebook and is using Android for two of its tablets. Google and HP are also partnering on SMB IT In a Box, which bundles Google Apps with HP PCs and printers.
Technology Business Research estimates that the Google Cloud Platform and Google Apps together accounted for $200 million in revenue during the quarter, a 195 percent jump from last year's second quarter, Jillian Mirandi, an analyst with TBR, said Thursday in a research note.
TBR expects Google to rake in $885 million in revenue from these products in 2013, Mirandi said in the note.
PUBLISHED JULY 19, 2013