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Alert: Five reasons to watch Google in 2010 >>

Google is trying to replace — not enter — the market >>

Small and medium-sized businesses, especially, are becoming comfortable with nebulous apps and services >>

 Google needs to grow into new areas >>

IT buyers are looking for more bang for their IT bucks >>

Google doesn’t need to charge >>

Since everything Google does can be used to enhance the delivery of ads against search results (and in other ad venues), it doesn’t need to charge much – or anything, in some cases – for the technology it offers. Unsurprisingly, businesses become pretty interested in low-cost and no-cost solutions. Though the trend is still in its infancy, many IT buyers are opening themselves to the idea of using Google-supplied software-as-a-service solutions in place of their existing systems.

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IT buyers are under pressure to show that their investments are performing. So, if they can keep TCO down and spread their budgets across more projects (with ROI potential), the result is an expanded ROI impact, with low investments yielding substantial returns. This means spending less – and compromising – can pay off in the long term … or at least it would appear that way. Google is making it easier for them to do this — or it’s at least creating the appearance of easier TCO and ROI.

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Search and online advertising offer limited upside for Google at this point. Sure, they can still contribute significantly to Wall Street’s expectations, but they won’t be sufficient to fuel the sort of growth Google needs to maintain the reputation it’s developed over the past decade. The company’s expansion into personal and enterprise applications shows that there’s a need for new revenue streams. This is the impetus for Google products that could wind up replacing some segments of the market where IT VARs operate.

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Being able to touch something isn’t as important as it used to be, and the ability to maintain control has declined in importance. Instead, IT departments are watching total cost of ownership and return on investment. Obviously, lower cost solutions favor these metrics. Cloud computing, software-as-a-service and other hosted and managed solutions are entering the IT cultural lexicon … and the attendant budgets and data centers. Google makes it easy to adopt, implement and afford its “nebulous” solutions. And, as long as they work as planned (which is most of the time), it’s easy for an IT department to be happy. When something goes wrong, though, remember that the Google organization and operation is not designed for support.

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It’s easy not to see Google as a competitor. First, the company’s major operations – search and ads – don’t really interfere with what VARs are doing, namely selling and implementing IT solutions. Also, Google isn’t entering the VAR space, so again, it doesn’t look like a competitor. The problem is more difficult to detect: Google is slowly trying to replace certain parts of the IT market. Enterprise use of its Gmail service, for example, replaces the opportunity to sell mailserver solutions. The problem isn’t widespread yet, but now is the time to watch Google’s moves and determine the impact to your business.

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Google is starting to edge its way into what would normally be considered the traditional IT business. It’s delivering both personal and enterprise applications, from office productivity to e-mail to data storage. And, it’s generally charging very little or nothing at all. For small businesses especially, Google is making a variety of IT options available at extremely low prices. If this trend continues, Google could begin to erode the markets that currently belong to traditional IT manufacturers and value-added resellers.

This week, we’re running a series on the enter:marketing blog  – Five Reasons to Watch Google in 2010. Stop by every day to learn how the search engine giant is moving into other aspects of the IT industry … and how this can affect your business. To discuss ways to bolster your competitive strategy in regards to this challenge, please contact us today (opens an e-mail message).

Click here for a page to bookmark for the “Five Reasons to Watch Google in 2010″ series >>