Enterprise executives know that employees are most productive when they have the right tools and more importantly, know how to use those tools. When employees come on board having already used the software your organization uses, “downtime” as well as the costs and effort tied to training is limited. The same can be said when you implement a solution that your employees are already familiar with. The fact of the matter is that enterprise employees are first and foremost consumers and vendors are very much aware of this. Vendors know that they have a more compelling story to tell the enterprises they target if they can show strong consumer use and adoption.
Consumers Are Using Productivity and Video Conferencing Solutions More Than Ever
The unprecedented global impact of the coronavirus pandemic has forced millions to shelter in place and stay at home. People are having to urgently find ways to remotely work, attend school, and socialize with family and friends from a distance which has caused a surge in the use of cloud-based productivity tools (such as G Suite and Office 365) and video chat/conferencing solutions (such as Teams, Zoom, Google Meet, and Slack). While many may have used these tools prior to the outbreak, they are now likely using them more than ever before. Many who have never used these products are now having to learn how to, such as parents who need to set up their children for digital learning.
Whether forced or not, the consumer appetite for these products has significantly grown and vendors are hopping on this opportunity to increase consumer use through free trials and other offers. This increased use could help drive enterprise adoption and expand enterprise use, especially for Google Cloud as it has been ramping up efforts to penetrate the enterprise and take market share from incumbent Microsoft. Google has been successful but there is certainly more work to be done as they transition from being enterprise-ready to a true, trusted enterprise vendor.
Similarly, both Zoom and Slack understand that if they want to accelerate revenue, they need to find ways to penetrate more enterprises. But the struggle they have is two-fold. First, they don’t offer other solutions the enterprise could tie itself to and second, the more established Microsoft and Google have product suites with competitive solutions to Zoom and Slack built in. Microsoft’s Office 365 includes Teams and Google G Suite comes with Google Meet. It is a hard sell to get these enterprises to add a solution that they already have. That’s why it is incredibly important for Zoom and Slack to dominate the consumer space – it makes the sell a bit easier.
Google is Gaining Traction
Beyond the consumer use of Google’s G Suite solutions, Google has accelerated enterprise adoption in the past couple of years. Javier Soltero, VP and General Manager of G Suite at Google (who joined Google Cloud last October and was previously at Microsoft as VP of the Office Product Group) recently shared that Google Cloud has officially passed 6 million paying G Suite business customers. This is an increase of one million users from last February, so they are increasing their business customer base by around one million each year.
These types of announcements show the market that G Suite is increasingly being considered a viable option for businesses, including those looking for alternatives to Microsoft Office 365 (whether acquired directly or through the all-in bundle Microsoft 365). Of course, it is much harder to move away if Microsoft 365 was adopted, given the pain associated with trying to decouple the bundle. Microsoft doesn’t like that very much, especially if you tell them you are moving to Google G Suite.
Google has also recently announced that they have rebranded “Hangouts” chat to “Google Meet” which will likely mesh better with the enterprise world. Google Meet, which competes with Teams, Zoom, and Cisco Webex, has had 25X more use since January. This number could quickly increase as Zoom customers proverbially jump ship in response to security concerns. Though the current stay-at-home orders are certainly helping these numbers, they aren’t the only reason Google is gaining traction.
Google has been targeting enterprises for a while now and they likely will continue to invest in developing their enterprise-focused solutions (G Suite, Analytics, GCP). I also suspect they will continue to focus on hiring established executives from other enterprise vendors as they did with Javier Soltero, Robert Enslin, and Thomas Kurian. To further prove their success to the market, Google will also likely start breaking out their G Suite revenue sometime this year as they continue to announce ramped utilization and associated revenue from businesses.
Microsoft Creating Barriers of Entry for Google
Microsoft sees what Google is doing and is working to protect their space by making it harder to move away from Office 365. One way they are doing this is by providing deeper and more enticing discounts for customers who have not yet adopted Office 365 or Microsoft 365 at all or just have not rolled out the solutions to their entire organization. They are putting especially aggressive discounts on the table for the firstline worker community.
Firstline workers are the deskless users that Google has been focusing on as a way to penetrate enterprises. Enterprises need to give these frontline workers access to more tools in order to stay competitive. As previously mentioned, these frontline workers are also consumers who would benefit from having experience with the solution their employer provides to them. When you see Microsoft’s reports of growth and the way Microsoft is treating their customers, it is clear that keeping Google out of their enterprise customers’ portfolios is a priority right now.
While Google is making changes to ramp enterprise adoption, Microsoft is making changes to better target the consumer market. They recently announced Microsoft 365 bundles for consumers and “Teams for Life”, its consumer edition of Teams which is expected to be available later this year. I expect Microsoft’s efforts to target consumers and further land and expand enterprise adoption will only ramp up as Google increasingly becomes not only enterprise-ready but a true enterprise solution with G Suite and Google Meet. Microsoft also now has to be concerned about what Zoom and Slack are doing as they gain more leverage with enterprises given ramped consumer use and adoption.