Google: We Have Stronger Products Than Microsoft

Google on Wednesday launched a new channel program aimed at opening sales of its Google Apps Premier Edition hosted office productivity software to solution providers for the first time.

Stephen Cho, director of Google Apps Channels, spoke with Channelweb.com Senior Vice President Robert DeMarzo, Editor/News Steven Burke and Assistant News Editor Scott Campbell about the new Google Apps Premier Edition Reseller program.

The partner program, the Mountain View, Calif.-based company's first formal channel offering around the Google Apps Premier Edition product set, offers solution providers 20 percent discounts, which translates to recurring revenue of $10-per-year on a $50-per-user, per-year-subscription fee. Google said that partners will maintain the billing relationship with the customer and prepay Google in advance for each one-year subscription. Partners will be able to start deploying Google Apps Premier Edition seats in March.

The channel program pits Google directly against Microsoft's wildly-popular Office packaged software applications suite and Windows Live Essentials.

Cho talked about the battle with Microsoft and shared details of the new channel program. Below are excerpts of the conversation.

On the SaaS front, do you think you have a better channel program than Microsoft?

We believe that we have strong and stronger products in the marketplace around SaaS and a channel program that will compare favorably with any of the other programs that exist in the market.

Our main point is we believe we have the best products in the industry around cloud computing and will continue to develop and advance those and build a channel program to match around it.

Is this a throw-down aimed at Microsoft?

Our objective is to serve customers and build the greatest products to serve customers in the marketplace. We will continue to do that aggressively.

Why is Google's offering a better choice for resellers than Microsoft?

What we see in the reseller community is a lot of familiarity and reality around working with Microsoft products. And we expect to see that continuing of course. Folks are now migrating and expanding into new areas of opportunity following to where their customers are leading them. What our program provides is a robust full-service channel program for them to expand into the new full SaaS, full cloud computing environment where they are provided with a good channel discount which they receive into perpetuity and a good reselling revenue stream that recurs as well as a service revenue stream around it, as well as a platform for them to develop and add additional solutions.

Next: The nitty-gritty of Google's new partner program

Take us through the commitment that partners must make under the channel program

Specifically, there are several things we ask the resellers to do. No. 1 is to market and promote the product and do the selling. They are then able to resell the product itself, bundle it with any additional product or service offerings from their portfolio, and then they do all of the billing, relationship [management] with the customer and collection. So they have full control over the customer billing relationship. They can cross-sell, up-sell, and bundle in additional offerings. We believe that is critical to them so they can continue to be the trusted advisor to their clients and deepen and extend their customer relationships.

So partners get all the money, and then they cut you a check for your 80 percent?

That is correct. They carry the paper absolutely.

Do they pay you annually at the beginning of the year or monthly?

They pay on an annual pre-paid basis. [At $50 per user, per year subscription with a 20 percent reseller discount], they would pay $40 when the seat is ordered for the customer.

Do you expect that the reseller will charge an annual fee or work it into a monthly fee, especially if they are adding other services?

The resellers are able to do any kind of pricing and any kind of terms they see fit that works in with their business, whether it be monthly, quarterly, annually, multi-annually, whether it be standalone or bundled with any other offerings. That is completely up to the reseller.

Can resellers private-label Google Apps?

Effectively private labeling is [not an option]. The branding on it is ACME.com and it looks like ACME.com e-mail, ACME.com all of the other apps on the domain of the business. There is a "Powered By Google" down in the corner on some of the pieces. But the branding is actually the customers' own branding.

Is there any protection if another reseller comes to a client and offers to take away two points off the terms of a deal that is already in place?

As is generally the case, our philosophy is to serve the customer and the user. And so customers always have the freedom to move to a different reseller if they wish, to a direct relationship with Google if they wish. Clearly if, for example, they are paying on an annual basis if they do move, they would forfeit the remainder of what they paid for in their term with a previous provider. But the customer will obviously have the opportunity to move if they believe they are not getting the service they need from the partners they are working with.

Is there any deal registration for accounts?

There is not a full opportunity registration system currently in place. But we expect many of these customers effectively are customers that would not be able to find and have access to the Google services on their own. The Google services are easy to use, and plenty of companies come to us directly. But many companies really are only going to be served by some of these partners or an ISP giving them broadband access providing this capability to them that they otherwise not would have knowledge of.

Will you have a reseller locator on your Web site?

If you look on the Web site now, there is a solutions marketplace around the Apps area for people that provide value-added services today already around Google Apps, and there will also then be effectively a reseller directory as well.

Right now you have 10 million active users that are handled by Google directly. Will Google continue to have a direct presence here?

In those 10 million users, some of those come through partners already, some of them come from ISPs and their consumer Internet businesses.

How many of those 10 million are direct?

We are not sharing directly exactly what that split is. It is safe to say that the current state is not what we expect to continue to see. We expect to continue to see an acceleration of the customers that are served by resellers and channel partners as we go forward here. We will continue to provide direct access online and direct access through our enterprise team here for those customers looking to come to us directly. But it is simply not possible for us to serve all the customer demand that we expect in all the countries and in all the markets. We look at Google really as a product and technology company. We are looking to our channel partners to be able to serve and meet the needs of customers locally around the world.

Next: Dealing with channel conflict

Do you have any terms to mitigate potential conflicts if Google bumps up against a reseller with its direct team?

We worked closely with our pilot resellers as well as with our internal sales and channel team, and we have worked closely to set up the incentives both on the channel partner side as well as on the internal team side such that our internal teams as well as our channel partners are encouraged to work together in a seamless way around going after business.

Will your direct team get compensated for partnering with a reseller?

We have worked such that the incentive plans align the objectives so our internal folks are encouraged to work with partners.

It sounds like Google direct sales reps are not paid a full commission for every channel sale that goes through the territory. Is that the case?

We are not actually specifying the degree and level. But the incentive structures are aligned so that the resellers are encouraged to work with our direct teams and our direct teams are encouraged to work with our resellers. We expect to see joint, healthy sales pursuits on both sides. And we will continue to listen to both channel partners and the internal team to make sure those incentives continue to be aligned.

What requirements do you have around training or certification?

There is a specific qualification process that we work through with potential resellers around getting trained and demonstrating expertise with the products, and then [we are] therefore also running through a finance check and extension of credit terms based on the nature of the company and of course the human evaluation specifics. Channel teams on our side evaluate [potential partners] based on a number of other criteria.

What are your strategic goals from this in terms of overall market share, revenue, disruption of some of key other players?

At the high level this is to serve customer demand. If we look back at the year 2008 is the year in which the product really matured and many of the major first customers started to come on board and we started to see acceleration on the customer side. We look at 2009 as the year that the business is really poised to accelerate. And in order to meet the customer demand around the world we expect -- millions of new business users -- it is essential for us to work with partners around the world.