Google Channel Chief Casts Cloud Over Cisco, Microsoft

Stephen Cho, director, Google Apps Channels, told solution providers that those vendors preaching private infrastructure applications are comparable to companies that were more than 100 years ago generating their own power before the onset of electric utilities.

"This change (to public utilities) happened not because the technology was interesting but because there was a fundamental economic advantage," Cho said. That same shift is happening with cloud computing, he said. It's not the "cool" factor driving the cloud computing revolution, he said, it's the ability to deliver "more value" to users for less money.

Cho, a former nine-year-Cisco veteran, took Cisco's pricey TelePresence videoconferencing system, that can cost businesses several hundred thousand dollars, to task. "I like punching holes in this," he said. "This is brilliant, but not every person can afford the price (for Cisco TelePresence), which includes furniture and paint on the wall to deliver that kind of an end-to-end system. Frankly, for many business cases, it is, of course, really not needed."

In contrast, Google offers its free Voice product that allows users from around the world to simply pop open a browser from incompatible systems connected to the internet and conduct a seamless video chat. "It works, absolutely" said Cho of the Google Voice product. "If it doesn't work in a consumer environment everybody walks away and you have nothing. It is about users and delivering value to users. That's what counts."

The Google cloud offerings like Google Voice are successful, said Cho, because they deliver value that is "simple and easy to use" by end users and businesses. Google is getting set to roll out soon a multi-user video conferencing chat solution, said Cho.

Cisco, for its part, has maintained that its TelePresence videoconferencing systems have provided dramatic cost savings for businesses that have significantly cut down on business travel. What's more, Cisco points to the sales and profit gains for partners that are selling the product.

As for the battle against the traditional PC-based software productivity suites, Cho pointed to the dramatic cost savings customers are benefitting from by adopting Google Docs rather than an on-premise offering like Microsoft Exchange.

Cho claimed the total cost of ownership (TCO) for an on-premise e-mail offering like Microsoft Exchange at $300 per user, per year compared to a Google Apps TCO at $90 per user, per year. What's more, he said, Google has, on average, 10 minutes of downtime per month versus 2.5 to 3.5 hours of downtime on average for a premise-based e-mail system.

"We have better value for businesses and it costs less, period," said Cho. "It is very trite, but it is just true. And that's why we are at the beginning of a sea change. We love to have this conversation with customers all day long. Any customer who is open to listening to facts you can turn."

Cho also scoffed at the security concerns that some on premise application providers raise as a red flag. "People love to challenge us on security and what is going on in the cloud," he said. "Let me tell you that we have invested in people and technology to make what we have in our cloud secure. What we invest in that dimension alone dwarfs any single corporation's IT budget by an order of magnitude."

"We recognize, react, solve and deploy a (security fix) solution before most corporations even see it," he said.

Cho said the days of IT budgets as high as 50 percent of capital budgets in corporations are gone forever. He said the average IT spend as a percent of capital budgets, estimated at 10 percent 50 years ago, still has a long way to drop.

The opportunity for solution providers is to help customers achieve dramatic cost savings by moving to the cloud with offerings like Google Apps, said Cho.

Google is betting, in particular, on Managed Service Providers (MSPs) to help Google Apps win market share against Microsoft's portfolio of SaaS applications.

The Google Apps channel program offers VARs a 20 percent discount and the ability to receive annual recurring revenue stream for each user. "There is an opportunity here to move from a one-time, hardware-software, capital acquisition cost, project-based services work to an ongoing, recurring revenue stream around the resale of products and delivery of services," Cho said.

Cho pointed to the success of IBM with its IBM Global Services business during the last information technology downturn. "How happy was (IBM CEO) Sam Palmisano in the (information technology) downturn when he opened up his book of business for IBM Global Services and had a $98 billion backlog of ongoing business," Cho said."That is the opportunity in front of us here."

Tony Balistrieri, vice president of partner management for FusionStorm, a San Francisco, Calif. solution provider, said cloud is a major initiative for FusionStorm. "We are actually looking at adding a whole cloud division," he said.

Balistrieri sees the cloud business as a compliment to the work he is doing with vendors like EMC, Sun and Cisco. FusionStorm has moved aggressively into managed services with a data center in Las Vegas, he said, noting the cloud business is a natural extension of that business.

"I think we can build a business around this," he said. "I've got to look at how we can make money doing it and what the adoption rate is going to be."

That said, he noted that many businesses are going to be resistant to change fearing that they will be giving up control of their data. The most compelling benefit is that it reduces IT capital expenses for customers and offers a recurring revenue opportunity for solution providers, he said. "For resellers the value for us is building recurring revenue models," he said. "Otherwise, everything we do is on a 30-day cycle."