Saturday, February 12, 2011

Could Google Risk Taking on the CRM Market?

While the CRM market is far different than Google's business model, there's speculation that it might become Google's next frontier. With lots of cash and some traction in the enterprise market, Google could be tempted to try CRM, but an analyst thinks that would invite spectacular failure. He said a CRM move would "make Steve Ballmer's day."

There's speculation that Google may be toying with the idea of entering the CRM Relevant Products/Services market. With Google Apps gaining traction in the enterprise Relevant Products/Services, some observers think a CRM app might make sense for the search giant.
Google hasn't even hinted at the idea, so where do such thoughts come from? Likely it's sheer curiosity. Google is sitting on hordes of cash, is actively acquiring companies, and many observers are trying to figure out what Google might scoop up next. CRM software is so far an untouched vertical for Google.
"Google is still enthralled, much like Netscape was, with the enterprise market. So if Google is going to go into the enterprise, CRM would be a logical place for them to jump," said Rob Enderle, principal analyst at the Enderle Group. "But for the type of company Google is, the more effort they put into the enterprise market, the more exposed they are going to be -- and the more likely they are going to end up like Netscape did."
The Netscape Comparison
Why does Enderle draw the Netscape comparison? Because, as he sees it, Netscape made the mistake of going after enterprise business before consolidating control of its base revenue. Although Google does have control of its base revenue, the best possibilities of new revenue for the company are in consumer-oriented and advertising-based products. Google Apps may have gained some traction, but enterprise revenues are largely insignificant compared to Google's consumer-facing business.
"If Google moves over to CRM, which is solidly business, the advertising-revenue model probably won't work because the people don't want their opinions or information shared," Enderle said. "In that product class, Google is on a hard path to a traditional software model, and that is a model that Google is not set up to embrace yet."
Could Google build out its own CRM product? Yes, but Enderle questioned whether Google could do so successfully against the likes of Oracle and Microsoft Relevant Products/Services. Google, he said, isn't structured to go after the traditional software market. Google is still essentially an advertising-driven free utility vendor. Enderle thinks a Google CRM product would be a spectacular failure.
Google's Model Flaw
"CRM is about as far away from that type of product as you are likely to get from what Google does. One step further would be CAD/CAM. Google going to CRM would probably make [Microsoft CEO] Steve Ballmer's day," Enderle said. "If you are competing, you compete on your strengths. You don't step into an area [dominated by] the strengths of others."
Still, Google may have to do something different. Enderle sees a long-term problem with the company's business model -- the source of revenue is largely smoke and mirrors. Google essentially sells eyeballs of people browsing the web.
"Unlike a traditional vendor, Google doesn't own its product. Maintaining control over something you don't own can be very difficult," Enderle said. "Any distraction at all at this phase could open them up to a major mistake. On the other hand, if they don't make a conversion before someone figures out their model and that this revenue could be shared, they are going to be screwed, regardless."

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