Google’s Enterprise Strategy: Business as Loss Leader?

The current issue of InformationWeek has a cover piece on Google’s enterprise strategy, including an interview with CEO Eric Schmidt. The supposed nugget in the piece is Eric Schmidt’s sorta pre-announcement that Google sees its Google Mini as a Trojan Horse in organizations, one it can use to lever sales of other products, as well that it can use to extract information from organizations:

“Imagine the evolution of this product line,” he says, pointing to the company’s blue Google Mini search appliance. “It gets very interesting. Without preannouncing anything, it seems like a no-brainer. You have lots of these things sitting around inside all these [companies'] networks. Just think of the strategic value of that to Google.”

Fair enough, but I didn’t find that as interesting as the back-and-forth around the InformationWeek’s writer that Google may never take the enterprise business very seriously. As he points out,

Google’s base of 1,000-plus business customers generates only a tiny sliver of company revenue; nonadvertising revenue accounted for 1% of the company’s sales last year. Last week, the day after unveiling the Desktop Search for Enterprise, Google revealed a major new home-page customization option that takes consumer rival Yahoo Inc. head-on. It’s unlikely that Google’s business model will diversify noticeably from advertising in the near term, Schmidt concedes….”It makes perfect sense to me that you should do this even if you weren’t making money, which is not the case,” he says.

Fascinating. Who would have thought that selling software into enterprises could one day become a loss-leader for a technology company’s consumer strategy?

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  2. Me and Harvard Business Review
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  4. Rods, Cones, PARC, and Google’s “Errant Strategy”
  5. The Hole in Microsoft’s Messaging Strategy