Google searches for new horizons

Emma Nash reports on how the company is looking to diversify, with the business market in its sights

Written by Emma Nash

Internet giant Google’s stock price tumbled seven per cent last week when chief financial officer George Reyes said the company will not be able to indefinitely achieve the high growth rates it has been enjoying of late.

While Google is not expecting its core internet advertising market to shrink, it is conscious that it needs to move into other sectors and diversify its revenue.

And the business market is where its sights are firmly set.

Google Enterprise is responsible for most of the firm’s business activity. It sells servers with built-in search functionality.

Last week it announced its newest Google Mini, a small-scale version of the technology for small businesses.

The company now has a full complement of the devices running Linux software and Intel processors, designed for the very largest organisations to small businesses employing as few as five people. Prices range from £1,300 to £50,000.

Roberto Solimene, Google Enterprise director for Europe, says generating sales from business customers is becoming ever more significant for the firm.

‘Diversifying revenue is always a key point for every organisation,’ said Solimene. ‘The business market will be increasingly important from a strategic and a revenue point of view.

‘We are already working with large enterprises around the world with advertising. Now we are entering their organisations. From a revenue perspective we think the market is huge for this kind of opportunity.

‘The internet contains 20 per cent of the world’s information. The other 80 per cent is held within organisations. If we can give companies a tool to find that information we will have delivered our goal of organising the world’s information.’

Google Enterprise was established three years ago. It has some 3,500 customers – 600 in Europe – including the likes of British Airways, Channel 4, the NHS and the British Library.

Solimene says the division accounts for just two per cent of Google’s overall $6bn (£3.4bn) revenue, but there are plans to grow this part of the business.

Google believes it can easily surpass its rivals in both market share and technical ability.

Excalibur technology from Convera, and vendor Autonomy, who completed the acquisition of rival Verity at the end of last year, are seen as Google’s main competitors. While Autonomy had a record year in 2005 with revenue almost doubling, it still only hit $96m (£54.7m).

‘Google has annual revenues of $6bn, so even a small percentage is huge,’ said Solimene.

‘We want to be at least 10 to 15 per cent of sales, but that’s not a set goal.’

Google is under no illusion that it will be able to take an immediate grasp of the business sector, but is in the process of beta testing its email service Gmail, for enterprises. It is also looking at Google Earth for businesses, giving companies access to its online mapping system.

But search technology is still key, says Solimene.

‘Some 70 to 80 per cent of investment is put into making the search experience better,’ he said. ‘That means we can spend 30 per cent on other things such as Google Earth, but they are not core to our business.’

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