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Why does Google want Google Apps resellers?

I recently attended a Google Apps Reseller recruitment presentation. I don't think it's a good fit for me, but I'm cranky and hard to get along with, so I could be way off base. See what you think of my take away.


As you may know, Google sells Google Apps for Business. This is Gmail, Calendar, Docs and more bundled together into a supported package for $50 per year per user.

If you were actually going to use everything, that $50 price is dirt cheap, though really most businesses would compare that against Exchange or solutions like the Kerio that I sell, making it less of a bargain. That's not necessarily fair, but it is how most will see it as mail and calendaring really are the most important. The rest of the apps are less commonly used; those users who do need them can use the free versions.

Let me hasten to say that I do think there are situations where Google Apps makes sense. Most of these are probably very small businesses who would qualify for and likely use the free version rather than the $50 per year/per user suite, but there certainly are some larger cases who might benefit from the paid offering.

I should also probably mention that I use some Google products (though not Apps) and am not generally negative toward Google or its products. I get annoyed by some of the things they do and don't do, but I have a generally warm attitude.

So why all the preamble? It is because I just returned from a Google event that annoyed me at several levels.

This event was an attempt to recruit Google App resellers. It was held at Google's Cambridge, MA location and attendance was probably around 60 people or so.

I was VERY disappointed. I've seen better presentations at cheap Holiday Inns where sweaty bald guys in ill-fitting suits lied about time sharing investments.

I expect better from Google

In retrospect, that was probably silly. Google often trots out half baked software; why should I expect a presentation like this to be well done? Silly me..

The first problem was the projection screens. There were two of them, side by side, and one displayed at a larger resolution than the other. Too much light was coming in the windows, washing out the screens. The screens were also too close to the floor, which made it impossible to see the bottom parts if you were sitting in the back.

The presenters kept forgetting their microphones and although two of them were ready to bring mikes to people who asked questions, they mostly forgot, and then the questions were answered without being repeated, making the answers incomprehensible to most of us in the back.

That's when there were answers. There was quite a bit of "I don't know" and futile beseeching of the other presenters for help.

One thing I wish all presentations like this would do is stream the content they project so that those of us with laptops/tablets (which is most who attend these things) could avoid squinting at the screen and could grab screenshots of things we want to review later.

Oh, yeah: they ran out of coffee. They fixed that quickly, but sheesh - is THAT so hard to plan for?

But that's all mechanics. What was this all about?

Google Apps for Resellers

Why does Google think it needs resellers to help sell a package of apps that are often very familiar to the potential buyers? That's what the presenters, a trio of eager young Google employees, were about to explain to us.

Let me add that, given the audience mix, a bit more maturity in the presenters might have made a better presentation. There was an auxiliary presenter, a non-Google person, who had a few gray hairs, but these kids were young. It's ageism, yes, but it's reality. Those kids see someone like me as an old geezer and I see them as inexperienced. Hint to Google: mix it up a bit. We like to see that fresh faced enthusiasm, but we also like to know that there are some seasoned people in your employ. Trot them out for groups like this because most of us have been round the barn more than once or twice.

That aside, they began by telling us that business is shifting to the cloud.

Only a fool would disagree, of course, but Google is hardly the only player in the cloud. Microsoft is there and thousands of people offer hosted services using Amazon or other virtualization as well as rented rack space. It's not exactly difficult to find hosted Exhange, hosted Kerio or hosted anything.

You might protest that Google has much more solid infrastructure than many, but it was ironic that they experienced an embarrassing outage just the day before this presentation. The Cloud may be the the shiniest schizzle yet seen, but sometimes ill winds blow all the clouds away. Businesses tend to dislike discontinuity - for obvious reasons. Google guarantees 99.9% uptime, but that's almost 9 hours a year of downtime - your own equipment matches that easily,

There are other disadvantages to the cloud, particularly when it is somebody else's cloud as it is with Google. You don't have the privacy or control you have when you own the servers. As one attendee put it, you have no 'god mode' with Google. You don't have full administrative access, you can't fix simple server problems because it isn't your server!

Google software

Google software has its warts, too. Gmail is the best of the lot, but all of it is rough around the edges. That's acceptable when it's free, but when you are paying $50 a year per user, those rough edges might be more irritating.

Since we are mentioning money, let's note that at $50 per user, there is a sweet spot for Google and (depending on your math) it is probably in the 10-20 user range. Above that, it starts to make sense to run your own in house or hosted apps - even adding in local support costs that you'd probably still have with Google!

I'll reproduce a chart from my Hosted Google Apps Gmail vs. in-house Mail Server that shows a breakdown of costs over 5 years; see the article for details of assumptions.


 Users Gmail Kerio
 5 $1,250.00 $2,620.00
 10 $2,500.00 $3,970.00
 20 $5,000.00 $4,670.00
 50 $12,500.00 $6,770.00
 100 $25,000.00 $10,270.00


I picked 5 years because Kerio prices decrease after the initial purchase while Google stays on a flat plane. It's easy enough to do similar comparisons for different periods or different cost assumptions, of course.

However, in the under 20 user range, it's all small money, anyway. Really, it's all about features. People want what they want. If they want Gmail, fine, but if they want Outlook, price isn't the main issue. You can do IMAP to Google from Outlook, but that's not like Exchange or Kerio at all.

Feature set

The presenters made it plain that they think Google has great features. I smiled as they disparaged the "Outlook model" of clicking on headers to sort mail. They gushed about how much better Gmail is at searching.

Sure, but searching isn't the only reason why we sort, is it? This reminded me of Steve Jobs and his irrational dislike of arrow keys. Steve apparently didn't do spreadsheets; if he had, he would have left those keys on those early keyboards. Gmail search is wonderful, but sometimes we like those sortable columns, too.

The features aren't always that reliable, either. I've had serious issues with Google Calendar that remained unresolved for long periods - that's why I link to my Kerio calendars as explained toward the end of this post.

The presenters also made strong points about cross platform comparability. That's a very good point, though Google is hardly the only one doing that and their record is rather less than perfect anyway - Gmail and G+ on my iPad are clumsy at best. But yes, we have to give high marks here (Kerio beats them, though, especially when considering smart phone support).

Some rather critical features aren't quite there, as is certainly known to anyone who has ever accidentally deleted something from Google Docs - oops, no undelete! Kerio Workspace saves you from that debacle. Google email archiving can be done only by clumsy workarounds. There's more - Microsoft of course does a great job of documenting everything bad about Google Apps (though they may be slow to update it as Google fixes things).

But everything has its downsides, right? Different features, missing features, bugs, clumsy parts.. As I said, Google Apps may be exactly what some folks want and need.

So why does Google want to hand over a 20% margin to resellers?

Let's let Google answer that, shall we?

The Google Apps Reseller Program

From Google Apps "Opportunity" page:


Resellers focusing on project-based revenue can manage customer deployments including data migration, provide user training and best practices, tackle systems integration, and develop custom application extensions.

That kind of business needs local feet on the ground and often goes to people who have existing relationships with a customer. That's why Google wants resellers - they need us for the local grunt work.

No doubt many of those resellers are already selling much higher priced Microsoft solutions. Those resellers therefore might ask a question that Google is ready to answer:

From Google Apps Reseller Program FAQ:


Can we make money? Since Google Apps is so affordable for our clients, doesn't that mean less margin for us?

Businesses of all sizes are looking into how these products can best fit into and enhance how they work. From business process consulting on Google Apps adoption, to worry-free management of the application services, to comprehensive end user and administrator support - deep knowledge of our product and interfaces will offer you new revenue opportunities at a fraction of the overhead cost you're accustomed to. Also deployment, data migration, change management, and systems integration projects should fit into your business just as they do today. In fact, because Google Apps is so affordable, customers have more budget for additional valuable services from you."

Our presenters kept saying things like 'You can turn that $50 per user into $100 or $150 per user PER MONTH and at a much higher margin - 40-50%!"

Really?

I don't see it. First, I don't think there are that many opportunities for add on services and most of what does exist is one time or short term projects. Moreover, if you are bumping it up to that kind of money, you've priced yourself right out of most of the customers who might have looked at Google Apps to begin with.

Moreover, if Google is on a recruitment drive for resellers, any possible 50% margins on added services will evaporate in the crushing wave of desperate competition. There are a lot of hungry VAR's right now and if the customers aren't savvy enough to demand discounts, some more hungry competitor will surely show up to educate them.

Support

Google doesn't require the resellers to provide support. The presenters suggested that is a good revenue stream, but said that the customer could contact Google directly (with the reseller having access to the ticket).

Someone in the audience brought up Google's rather poor reputation for support. To my surprise, one of the presenters agreed that support can be a "challenge". Hmmm..

But support is challenging everywhere, so perhaps that was just an honest answer and we should applaud it. My thoughts on that subject are a bit more cynical: as Google Apps includes support from Google, why would anyone pay the reseller very much extra to "manage" that? Yes, if they have no in-house IT that does make sense, but otherwise.. no, it doesn't.

Custom apps?

The "custom application extensions" also attracted questions. This seems to have its own set of problems. I'm not familiar with it, but the feeling I got is that some Googling before locking in might be very sensible. That's assuming that the reseller wants to or is even capable of doing app development - I'd guess most are not, so it seems like those add-on opportunities aren't quite as rosy as Google says.

The deal breaker

The deal breaker for me was the "reseller tracks". The FAQ referred to above says that new resellers can't sell anything involving more than 250 users. Our presenters said that has been changed to 500 users, but of course that caused several questions. The presenters backtracked, saying that larger opportunities would be looked at on a "case by case" basis.

I didn't find that answer satisfying, so I approached one of them during the lunch break and asked for clarification. He said that after I'd "been with them" a bit, I could approach my "manager" and ask for permission to sell to larger customers.

Excuse me? I have to seek permission to sell something? I don't think so. I said as much to the Google guy. He protested that it shouldn't be any problem - I'd certainly get permission. Really? Then why do I have to ask at all?

I decided to cut bait at this point. The rest of the day would be more about those wonderful "opportunities" that I don't think really exist to the extent Google would like these potential partners to believe.

As I said, Google Apps might well be the right choice for some customers. It might also be the right choice for some resellers, but that group does not include me.

Best of both?

There are features even I like about Gmail. There are features I like about Kerio, too. I therefore forward (leaving a copy on my server) my Kerio mail to a free Gmail account and I link my Kerio calendars in Google calendars also. That's all very easy to do and gives me everything I could possibly want. I can look at my mail with Kerio Webmail, with Outlook (using the included Kerio Outlook Connector) or with Gmail.. total flexibility.

So, I'll pass on the reseller program, but remain a sometime Google user.



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© Anthony Lawrence







Mon Apr 23 17:12:12 2012: 10880   anonymous

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We are official Google Apps resellers and have been for 3+ years now.

We used to resell and install MDaemon prior to that so I do see things from both sides of the table.

In the MDaemon years, we had support calls for "emails not being delivered" managing backups, IP Management (Dyndns, etc) blacklist management (which was always an ongoing issue not matter if MDaemon passed every security test out there) as well as MDaemon's pathetic attempt with their Outlook Connector.

Since we have moved over to Google Apps, we get a total of zero support calls for email, etc. All emails get delivered, none get blacklisted. As a system, it just works.

The yearly revenue is nothing to write home about but the reduction in support calls for email has made that a very fair tradeoff.

Overall, having a customer host their own email these days does seem antiquated (and no, I am not blinded by the Cloud buzz) especially when most of our customers are on re-branded home DSL or cable connections.

I charge a few hours for data migration (which with the Google Apps Migration tool has also worked wonders), Google Apps setup and that is it. Allows us to concentrate on more important things like growing our main business (not that I am implying anything to anyone :) )

As for its use, most people use it for contacts/calendar and email. Even ourselves, we only use MailChimp as a Marketplace add-on.

However the flexibility is there and lousy presentations aside, Google Apps works and works well.

I am sure Kerio is a very impressive platform but to add another server/VM back into an infrastructure that does not need it...would never see that happening again.



Mon Apr 23 17:34:47 2012: 10881   TonyLawrence

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I can't imagine why you'd think running your own server is "antiquated" but your opinion is noted :)

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