Vembu, Sridhar, “Annother View: Why Google Won’t Focus on Business Software”, Government Computer News. (September 27, 2008).
“So what is Google’s plan? It is fairly obvious the company is in it to put Microsoft on the defensive on its home turf, to diminish that company’s offensive capability in the Internet. It is also perfectly clear why Microsoft wants to be an Internet player: as Google has shown, it is a higher-margin business even than its monopoly-profit core business.
So why is business software so much less profitable than the Internet? I can think of two reasons: 1) purchasing departments that know a thing or two about supplier margins and specialize in putting the squeeze on them and 2) sales and support costs, particularly support costs. When you sell software to businesses, they have all kinds of support expectations, which add to headcount. A search engine or a news portal isn’t expected to provide any customer support…”