Google Changes Playing Field for VARs

Vendor launches a worldwide channel-partner program for Google Apps in what will be a major boost for SaaS and cloud computing. It also means new competition for Microsoft.

January 15, 2009

Al Senia

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Google Inc. (NASDAQ: GOOG) has launched a worldwide channel partner program for the more robust, paid version of its Apps hosted collaboration and communications suite, embracing VARs, system integrators and other resellers interested in growing their SaaS business.

Google's move will almost certainly mean more focused competition for large software vendors like Microsoft (NASDAQ:MSFT) and others who depend on channel partners to market their applications to enterprise and small-business users. Google's new channel program competes squarely with Microsoft's Office applications package and Windows Live Essentials.

"We see a real hunger and eagerness to work with us on behalf of the reseller community," said Stephen Cho, director of Google Apps Channels, in explaining why the program was launched. "We are seeing quite a dramatic influx of interest already." The reseller program has been tested with 50 channel partners around the world, Cho added.

Although Google has other partner programs, this is the first centered around the Google Apps Premier Edition product line, which Cho noted has reached a level of maturity that makes it useful to all sizes of businesses.

Channel partners can use the new Google program to add cloud computing to their service portfolio, helping more businesses transition to what is being heralded by Google and many other vendors as a new era of software technology. Partners receive a 20 percent discount from the $50 per-user, per-year subscription fee for Apps Premier, and will receive that percentage every year a customer renews.

Training and Support

For its part, Google will provide channel partners with training, support, and tools for sales and marketing, as well as access to tools for integrating Google Apps into their customers' business operations. Cho said Google isn't seeking a specific number of partners and is opening the program "to people really interested in building their experience around SaaS and cloud computing."

Cho added, "This is a relatively simple program enabled by a globally scaleable channel structure." Potential resellers will be evaluated based on relevant experience and credit worthiness, he noted The reseller program includes a portal with business and technical information and online discussion groups; sales training, technical training, and customer marketing materials; and tools for setting up business customers, provisioning end users, management, and reporting. More detailed information is available at Google's reseller site: www.google.com/apps/resellers. Authorized resellers will be able to begin selling Apps by the end of March, Cho said.

One interesting element of the Google program is that channel partners will control much of the revenue and carry the paper. They will bill their customers directly, enabling them to maintain the overall customer relationship. Resellers can also bundle additional services and support with Google Apps, hopefully building a revenue stream beyond the annual renewal.

Potential Channel Conflict

However, the program likely won't be free of channel conflict. Google is marketing its Apps Premier service directly to business customers. Cho said the direct sales force will be "encouraged" to work with resellers, but he was not specific about what exactly that meant or whether such encouragement include financial incentives.

Tony Safoian, president of SADA Systems Inc., a channel partner involved in the pilot phase of the Google program, said the new program empowers resellers "to be experts in the cloud", enabling them to manage the total Apps Premier relationship with business customers. "Reselling Google Apps opens up new opportunities via new conversations we could not have had with prospective clients as little as two years ago" he said.

Industry analysts generally supported the new Google channel program.

"At the outset, I don't see this as a highly ambitious program starting with 50 resellers. Google's putting its toe in the water," said research analyst Jim Murphy. "But we do talk to companies that are considering Google Apps as a complement to Microsoft or IBM. They're testing these cloud-based services, and now Google is supporting the IT ecosystem with a reseller network. Over the next five years there's serious growth potential."

Nucleus Research analyst Rebecca Wettemanns said the right mix of channel partners will help Google Apps gain respect in the enterprise as a valid alternative. "It's an important step which is why you see companies like Salesforce with a channel strategy because it's a way to reach more customers," she said.

The market for cloud computing applications is still very new, said Rishi Chandra, senior product manager for Google Apps. "We're very excited about this expansion, and I think we'll learn a lot more about different use cases and monetization strategies."

The Google Apps Premier Edition suite includes Gmail, Google Calendar, Google Docs, Google Sites, Google Talk, and Google Video for business. To help differentiate the Premier and free Standard Edition, Google also limited the number of users a business can have on the standard version to 50. However, the limit doesn't apply to existing Standard Apps users.

(David Needle of InternetNews.com contributed to this article.)


TAGS: cloud computing,Google,Microsoft,SaaS,channel partners

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