Wednesday, January 14, 2009

Google hopes to take on Microsoft using resellers

NEW YORK, Jan 14 (Reuters) - Web search leader Google Inc (GOOG.O) took another step on Wednesday towards direct competition with Microsoft Corp (MSFT.O) by recruiting IT resellers to market its Web-based applications to business clients.

From the end of March, authorized resellers will be able to sell, customize and support premium versions of Google Apps, which includes word processing, spreadsheets, calendars and email.

Google Apps is broadly similar to Microsoft's top-selling Office package except that Apps is completely Web-based and is part of Google's push into so called 'cloud computing' or software-as-a-service. Microsoft said in October it is also looking at adding Web-based features for its Office applications.

Since it launched Google Apps in February 2007, Google has only sold directly to business users over the Web. Analysts said the move to work with third parties is necessary if Google hopes to compete seriously with Microsoft or IBM (IBM.N).

Microsoft, which is the world's largest software company, sells more than 95 percent of its software through more than 440,000 third party resellers, according to Gartner Research, and intends to spend around $3 billion on managing those sales channels in 2009.

By comparison Google has so far only dipped its toe in the water, but sees a great opportunity after running trials with more than 50 resellers in 25 countries. It also has a 9-month old relationship with Inc (CRM.N).

"We feel that Google has had limited success in winning customers with a singular sales channel," said Tiffani Bova, an analyst at Gartner Research, who estimates Google has around 200,000 Premier customers.

IT resellers typically sell services such as Web hosting, setting up servers and backing up data, as well as software to hundreds of thousands of end user businesses of all sizes.  Continued...