Tom Austin

A member of the Gartner Blog Network

Tom Austin
VP & Gartner Fellow
17 years at Gartner
41 years IT industry

Tom Austin, vice president, has been a Gartner fellow for a decade. He is chief of research for social software, collaboration, communications, information management, business intelligence and high-performance workplace (HPW) research. Read Full Bio

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Google Wave: Enterprise’s deserve more partnership, engagement and transparency

by Tom Austin  |  August 5, 2010  |  3 Comments

These thoughts are purely personal ones, about the industry, and they do not necessarily reflect Gartner’s official positions here.

Enterprise buyers and independent software vendors are not getting a fair shake.

Last night I read about Google’s decision to pull the plug on Wave. It was posted on the Google blog. Well, congrats to them for telling the world. But it’s not not enough to announce the execution after it has happened.

We’re going to publish an official position on the crash of Wave (this isn’t it) but I think there are some important additional lessons to be learned out of this situation, lessons for enterprises, software and service providers and Google, among others.

We just published a research note that I authored on the business mechanics of Google’s GAPE. The summary says:

Gartner estimates that Google Apps Premier Edition generates only 0.3% of Google’s revenue. Office, including e-mail and collaboration tools, generates 28% of Microsoft’s revenue and over half its profits. The firms’ offerings are similar, so exploit their business-model differences where you can.

Three tenths of a percent! GAPE is a rounding error (we estimate Q1 revenue at $21 million out of $300 million of “License and other Revenue” which itself is a miniscule proportion of the 6.8 billion dollars of total revenue they reported).

The troubling fact is Google has not released any official numbers on exactly how much revenue GAPE generates. For that matter, the other vendors (e.g., IBM and Microsoft) aren’t as forthcoming as we’d like them to be either. But Google’s lack of real transparency here is most critical because they have to establish credibility and trust to succeed.

We’ve heard the good talk from Google about how important Apps is to their strategy — from Schmidt on down. If it’s so important, we think Google should publish its GAPE revenue numbers and put their credibility on the line with their buyers, the SEC and the world. (We’d say the same thing to their competitors.) Further, we think enterprises should demand it — and not the hand waving we’ve seen about 25 million users (most of whom don’t pay for GAPE).

Think about the independent software vendors (ISVs) who may have invested in Wave. Now that Google has pulled the plug, why should enterprises believe Google won’t announce someday through their blog that they’re pulling the plug on GAPE? We don’t believe the effort is a big contributor to their results (read my note if you can). They may even be losing money given what we see. We’re sure Google will honor its contracts but that’s not enough.

If Google wants enterprises to trust them, they need to be far more transparent about how this business is going. And they need to be more forthcoming about what exactly they’re planning to deliver. Forget about NDA hand waving! Where’s the open plan? Google likes to position themselves as promoting the free flow of information. Where’s the free flow of information to the market about what they are going to deliver when?

A great test of Google’s strategy of “democratizing information” would be for them to make their ever evolving product plan public, along with status changes, slips, delivery ahead of schedule, plan changes and so forth. A few quarters of exposure to that for enterprises and maybe they could generate more credibility and trust with enterprises. And drive more openness from their competitors, too.

Google doesn’t feel ready to intimately engage the enterprise market. I love their sense of being “different”. I love their engineering derring-do and entrepreneurial spirit. But enterprise investments require more than flirtatious seduction. It requires a willingness and commitment to get married on the part of both parties. Google needs to do more to get enterprises to step up to the altar and get married.

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