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October 20, 2009

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Google sets global advertising effort for its online software

GOOGLE Inc said more than 2 million businesses now use its online office software, and the Web search leader was scheduled to go global yesterday with an advertising campaign to lure customers away from Microsoft Corp and IBM products.

The campaign, kicking off in countries including France, Japan and Britain, represents a rare foray by Google into mass-market advertising and underscores increasing competition to provide businesses with e-mail and other office software.

While Microsoft and International Business Machines Corp dominate the market for enterprise e-mail, Google is trying to convince businesses to switch to its so-called cloud-based services, in which software is accessed over the Internet and maintained at Google's data centers instead of on a company's computers.

Cloud-based services can provide cost savings over traditional software, though recent high-profile outages, including an outage of Google's Gmail last month, have raised questions about the reliability of online software for business users.

Gartner analyst Tom Austin said most businesses will eventually switch to cloud-based e-mail, but the process may take years. He noted that IBM and Microsoft have introduced cloud products recently, and that Cisco Systems Inc appears to be preparing to offer its own cloud-based software.

Last Thursday, Google CEO Eric Schmidt told investors during the company's quarterly earnings conference call he intended to boost investments in new business initiatives.

Google's Apps business - which the company has said is profitable and generates hundreds of millions of dollars in revenue a year - is a tiny portion of Google's overall business, which yielded almost US$22 billion in revenue last year.

According to spokesman Andrew Kovacs, the Apps team has doubled over the past year to more than 1,000 employees.

Google said Apps is used by 2 million businesses, up from 1.75 million in June. Those include both larger businesses that pay US$50 a year per user for Apps, as well as firms with fewer than 50 employees that get the software for free.

The company also said there are now 20 million active users of Google Apps, up from 15 million in June, although that number included students who use the free version Google provides to universities.



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