Zoho: Why do we compete with Google
Few companies are trying to compete with major players in the market. And even fewer are not afraid to talk about it out loud. Among those who dare to challenge “sharks” are Zoho , a startup offering online tools for working with your documents, spreadsheets, images, etc.
The following is the text of the statement published in their blog ( Translation: Roman Yuriev, toodoo is a social network of social media specialists, especially for Habrakhabr).
How do you plan to compete with Google or how are you already doing it? This question is asked quite often. Although it is better to ask why Google is interested in the business software market. Let me explain with examples.
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As for revenues, the table used the financial data of the last year. The number of employees is presented in the last quarter. Because of this, information on income per employee may be understated. Data on eBay does not include a reduction in the cost of Skype.
Here, the focus is on revenue metrics per employee and earnings per employee. As can be seen, firms in the business software industry and the consumer Internet industry are grouped separately from each other. It is worth noting that successful companies with an established business model like Oracle or Intuit do not receive even half the revenue per employee that Google has. And surprisingly, they fade in the background of trying their best Yahoo company. eBay also beats all records except Microsoft, and the largest software company itself is behind Google in terms of revenues and earnings per employee. And the latter is not even a monopoly.
The Salesforce.com example is very visual. Although the company likes to pretend to be an online giant, its income per employee is not much different from the income of comrades in arms. It is only a fraction of the revenues that these giants receive. I know perfectly well what the Internet giants are, and you are definitely not a giant, Salesforce! However, this does not prevent the firm to set exorbitant prices for its CRM program. It receives about a billion dollars in profits from a million of its users, striving to accumulate $ 1,000 from one customer per year.
Now I understand why we are competing with Google. Perhaps the story of this corporation is the most amazing success story of the entire existence of the Internet. However, we simply do not believe that it has rational reasons to penetrate deeply into the field of information technology. Lower rates of income and profits per employee could be tolerated if there were good growth opportunities in this area. But when serious competitors like Adobe or Intuit make money, many times lower than Yahoo's profits, when even the leader in software manufacturing for industrial enterprises, SAP, seems to be a more modest company than Google, it becomes obvious that the latter company will not get sky-high profits. (It is impossible not to draw attention to the fact that both SAP and Oracle make a profit per employee, much more modest than Google in revenue per employee.) So what is the plan for the Internet giant in this area? Obviously, he simply needs to force Microsoft to defend his own professional field and thereby reduce its offensive potential in the Internet zone. On the other hand, it becomes clear why Microsoft wants to penetrate the Internet. After all, the example of Google has already proved that this is a business with fairly high profits.
So why is the software business so much less profitable than online? Two reasons come to my mind. First, the purchasing departments are aware of the revenues of the suppliers and squeeze them. And, secondly, the whole thing is in sales and maintenance costs (the last reason is the most important). When you sell software to companies, they count on subsequent technical support, which ultimately leads to an increase in the number of staff. But the search engine news website does not require any technical support.
Another conclusion comes to mind. In business software, firms supplying small and medium-sized companies, such as Adobe or Intuit (Microsoft is also strong in SMB protocols), receive higher revenues per employee than those that focus on serving large enterprises. This is Oracle and SAP. It seems that soon the trade in SMB protocols will be transferred to the side.
At critical moments, and there are many of them in the business software market, Google’s resources will be spent on deciding how to monetize the huge amount of traffic generated by YouTube or compete with online auctions, rather than on finding ways to make more serious profits compared to Oracle, Adobe or Salesforce. This may explain why Google is not engaged in CRM programs, project planning tools, billing statements or recruitment. And all because these areas do not guarantee such profits that the Internet giant already has.
The following is the text of the statement published in their blog ( Translation: Roman Yuriev, toodoo is a social network of social media specialists, especially for Habrakhabr).
How do you plan to compete with Google or how are you already doing it? This question is asked quite often. Although it is better to ask why Google is interested in the business software market. Let me explain with examples.
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| Company | Annual income in billions $ | Profit in billion $ | The number of employees | Revenue per employee in thousand $ | Profit per employee in thousand $ | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Microsoft | 60.42 | 17,681 | 91000 | 664 | 194 | |||||||||||
| Oracle | 22.43 | 5.52 | 84233 | 266 | 66 | |||||||||||
| SAP | 14.9 | 2.82 | 51447 | 290 | 55 | |||||||||||
| Adobe | 3.16 | 0.72 | 6959 | 454 | 103 | |||||||||||
| Intuit | 2.67 | 0.44 | 8200 | 326 | 54 | |||||||||||
| Salesforce.com | 0.75 | 0.02 | 2864 | 262 | 7 | |||||||||||
| 16.6 | 4.2 | 19604 | 847 | 214 | ||||||||||||
| ebay | 8.1 | 1.6 | 15500 | 523 | 103 | |||||||||||
| Yahoo | 6.97 | 0.66 | 14300 | 487 | 46 |
As for revenues, the table used the financial data of the last year. The number of employees is presented in the last quarter. Because of this, information on income per employee may be understated. Data on eBay does not include a reduction in the cost of Skype.
Here, the focus is on revenue metrics per employee and earnings per employee. As can be seen, firms in the business software industry and the consumer Internet industry are grouped separately from each other. It is worth noting that successful companies with an established business model like Oracle or Intuit do not receive even half the revenue per employee that Google has. And surprisingly, they fade in the background of trying their best Yahoo company. eBay also beats all records except Microsoft, and the largest software company itself is behind Google in terms of revenues and earnings per employee. And the latter is not even a monopoly.
The Salesforce.com example is very visual. Although the company likes to pretend to be an online giant, its income per employee is not much different from the income of comrades in arms. It is only a fraction of the revenues that these giants receive. I know perfectly well what the Internet giants are, and you are definitely not a giant, Salesforce! However, this does not prevent the firm to set exorbitant prices for its CRM program. It receives about a billion dollars in profits from a million of its users, striving to accumulate $ 1,000 from one customer per year.
Now I understand why we are competing with Google. Perhaps the story of this corporation is the most amazing success story of the entire existence of the Internet. However, we simply do not believe that it has rational reasons to penetrate deeply into the field of information technology. Lower rates of income and profits per employee could be tolerated if there were good growth opportunities in this area. But when serious competitors like Adobe or Intuit make money, many times lower than Yahoo's profits, when even the leader in software manufacturing for industrial enterprises, SAP, seems to be a more modest company than Google, it becomes obvious that the latter company will not get sky-high profits. (It is impossible not to draw attention to the fact that both SAP and Oracle make a profit per employee, much more modest than Google in revenue per employee.) So what is the plan for the Internet giant in this area? Obviously, he simply needs to force Microsoft to defend his own professional field and thereby reduce its offensive potential in the Internet zone. On the other hand, it becomes clear why Microsoft wants to penetrate the Internet. After all, the example of Google has already proved that this is a business with fairly high profits.
So why is the software business so much less profitable than online? Two reasons come to my mind. First, the purchasing departments are aware of the revenues of the suppliers and squeeze them. And, secondly, the whole thing is in sales and maintenance costs (the last reason is the most important). When you sell software to companies, they count on subsequent technical support, which ultimately leads to an increase in the number of staff. But the search engine news website does not require any technical support.
Another conclusion comes to mind. In business software, firms supplying small and medium-sized companies, such as Adobe or Intuit (Microsoft is also strong in SMB protocols), receive higher revenues per employee than those that focus on serving large enterprises. This is Oracle and SAP. It seems that soon the trade in SMB protocols will be transferred to the side.
At critical moments, and there are many of them in the business software market, Google’s resources will be spent on deciding how to monetize the huge amount of traffic generated by YouTube or compete with online auctions, rather than on finding ways to make more serious profits compared to Oracle, Adobe or Salesforce. This may explain why Google is not engaged in CRM programs, project planning tools, billing statements or recruitment. And all because these areas do not guarantee such profits that the Internet giant already has.
Source: https://habr.com/ru/post/37746/
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