IBM Corp is trying to stymie Google Inc’s expansion into the business software market.
IBM is now selling a bare-bones e-mail service to companies for US$36 annually per worker, undercutting a more comprehensive package of software applications that Google sells for US$50 per user annually.
For that slightly higher price, Google is offering 25 times more storage: 25 gigabytes per account compared with IBM’s 1 gigabyte per mailbox. Google also throws in word processing, spreadsheet and presentation applications, as well as a video channel. None of those features are included in IBM’s package.
Even so, IBM believes its service, called LotusLive iNotes, can beat Google because it has a much larger sales force and relationships with corporate customers going back long before Google co-founders Larry Page and Sergey Brin were even born in 1973.
“This is trouble for Google,” Gartner analyst Matthew Cain said.
IBM is responding to the increasing corporate demand for inexpensive e-mail that’s run on computers owned by an external supplier instead of the company relying on the service. This approach has become trendy enough to get its own catch phrase — “cloud computing.”
Google has emerged as one of cloud computing’s chief boosters as it tries to generate more revenue from sources besides its dominant Internet search engine, which serves as the hub of the Web’s most profitable advertising network.
After finding little initial success when it began peddling corporate e-mail in early 2007, Google’s sales pitch has been resonating with more companies looking for ways to save money.
Now, IBM is counter-punching. IBM thinks the timing for its e-mail alternative is ideal, given that Google’s service suffered a highly publicized outage that locked out corporate customers for nearly two hours last month.
“Candidly, Google has shown itself to be weak” in some areas of e-mail, said Sean Poulley, an IBM executive overseeing the company’s e-mail service. “There is a world of difference between supporting a consumer-grade service and a business-grade service.”
Dave Girouard, who oversees Google’s e-mail and other services tailored for companies, responded that Google would learn the ins and outs of selling software to businesses more quickly than IBM would adapt to cloud computing. He said Google wasn’t planning to lower its prices.
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