Following Apple's (AAPL) lead when it comes to creating products is probably a good way to make money -- if the firm doing the following has Apple's resources.Google (GOOG) will start an online store through which it will sell third-party applications that run in concert with its Web-based business applications, according to a report by The Wall Street Journal. The core Google products include word processing, spreadsheet, e-mail, and calendar software: The "fully featured" Google Apps product sells for $50 per user per year.
Google has apparently had only limited success so far in getting businesses to buy its applications software, although it's difficult to quantify because the company does not break out exact numbers in its earnings filings. It claims more than 2 million businesses use the Google Apps software, but an unspecified percentage of those are using the free version. Microsoft (MSFT), by contrast, still dominates the business software industry: Its Office suite is used by 500 million people worldwide according to The Journal. Companies and their IT managers will almost certainly be reluctant to abandon software that they have used for years and which is much more well-featured than the Google applications are. Google's $50 price point may be enticing, but the lack of a broad spectrum of functions within its enterprise software is not.
Apple successfully built its App Store by inducing developers to create over 150,000 applications for its devices. Those have been downloaded over 3 billion times by customers who own iPod touches and iPhones. But many of those apps are free, and the most successful pay-to-download products are video games and other forms of entertainment software for personal use.
Whether Google can come close to matching Apple's benchmark will be determined in part by whether developers of new programs for its Google Apps platform can draw enough business to make any money. Right now, the distribution of Google's Apps software is limited. And if most customers won't pay $50 for Google's core product, what are the odds that any great number of them will pay additional amounts to buy third-party applications to enhance it?
Google Takes a Page from Apple's Playbook with Business App Store