IBM Versus Google: You've Got To Be Joking

So IBM decided to drop the bomb on Google -- Big Blue will offer a basic email service for $36 per seat, undercutting the latter's $50 a head Apps pricing. A Gartner analyst called it "trouble for Google," but I'm not so sure. I think that Google has still got some enormous advantages, and that IBM's target may actually be another company.

There are a few things I'll grant up front. One is that in the enterprise, IBM is about as respected a vendor name as you can get. It's been in the business forever, knows how to deliver corporate-level service, has a service delivery infrastructure second to none, and has an enormous and effective sales force. If you were going to point at a company and say, "There, they should be able to do this," IBM would be a prime candidate. As the old IT purchasing saying goes, no one ever got fired for buying IBM.

Also, this isn't some offer that is more about the selling than the buying. IT departments are heavily burdened, and that is likely only to get worse:

IBM's decision to start offering more cloud-based services is predicated on the notion that fewer people in IT organizations are carrying more responsibility. They are also more dependent on people outside of their organizations that need access to shared documents and files. On-premise collaboration applications can likely be manipulated to work in a shared manner, but LotusLive has been designed to work that way from the ground up.

IBM is charging less than Google, yes, and Google has seen some service outages that will make enterprise customers worry. But, as one Google Apps administrator I've spoken with noted, a few hours of downtime in a year is still far less than what many companies need for maintenance and upgrades.

More importantly, Google Apps largely reaches a different type of customer: the non-enterprise. Not that you can't find it in use at any larger company, but the sweet spot is smaller. And that one difference is an enormous advantage. Big enterprises have money, for sure, and many seats. But if you add all the employees together, they don't come close to match the number of people working in total at small and medium businesses. SMB has been the market that many big vendors have been trying to crack for years, because it's the only one offering the growth potential that investors demand. In that space, Google becomes a more dominant player because it doesn't have the association as a "big company" vendor. Plus, Google is offering a lot more than IBM, in terms of product suite and storage.

In fact, I'd argue that IBM is blowing this opportunity in a big way. The company clearly has the wherewithal, software, and resources to easily match, if not exceed, what Google is doing. (I'd be surprised if a fuller offering priced just a bit higher than Google didn't appear in the next six to nine months.) It could have gotten its foot into a door that it has generally found shut. Concerned about seeming to be too focused on the small guy? Create a new brand for the service and note that it's "powered by IBM." Microsoft hasn't been hurt by introducing Bing.

But I suspect that the references to Google, at least from IBM, are in part subterfuge, with the press playing right along. IBM versus Google seems like a great story. But consider that while Google Apps use is up, that's not what IBM is really targeting. No, it's looking at email. Try substituting Microsoft for Google, and things get clearer. IBM is looking to take Exchange out of the equation by getting corporate users to the cloud for email and undermining Microsoft's market position. All the while using misdirection so the industry isn't looking at what is really going on.

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