Google is one of the world’s most recognisable consumer brands, and when it comes to computer engineering, one of the most admired. But many observers think its move into enterprise applications may prove to be a step too far.

At the end of August the search engine provider launched Google Applications for your Domain, a suite of application services that includes Gmail, its email service, Gtalk (voice over IP or VoIP), GPages (a web publishing tool) and Google calendar (diary management).  All the applications are delivered as services over the Internet.

While the first set of applications are primarily aimed at enhancing services that are already commonly delivered over the web – such as email and VoIP,  Google also has its sights set on conquering the desktop applications market. An online word processor, Writely (acquired earlier this year), and a spreadsheet (Google Spreadsheets) will follow soon.

During the beta testing period, all the applications will be free of charge; Google will earn its revenues from advertising (see below).  But later this year, Google will introduce a subscription service alongside the free service. With Microsoft talking about delivering Office as an online service, a big collision of heavyweights is clearly on the way.

Google is not going to find it easy. Will business customers really drop their expensive but reliable Office applications in favour of a free or cheap service delivered over the web?

There are certainly several issues that managers will raise, however big their organisations. For many, one issue will be enough to rule Google applications out: privacy. The current beta test services use AdSense, a feature which automatically scans content and displays appropriate adverts. So, for example, Writely might scan an internal report and download adverts related to keywords into the word processed document.

Sheth claims that this is no threat to privacy: “We have a very strong privacy programme in general. We depend on users’ trust. It is at the centre of everything we do.”

John Stanners, an analyst at market watcher Ferris Research, says that he does not foresee larger companies using Google Applications and that the biggest concern for many will be that Google parses all your content to deliver appropriate adverts: “Larger companies have much greater concerns over data privacy; they have to keep tight control over their data.”

Google says that the AdSense feature acts merely like a spam filter, scanning the material for key words: “No human being ever reads the emails being sent or received in our Gmail service,” says Sheth.

Another concern: performance and reliability. Although this issue is raised with all software-as-a-service (SaaS) providers, applications such as word processing are particularly intensive, functionally rich and are traditionally hosted locally. And although Google has faultless record in availability (“When was the last time you saw Google down?” asks Sheth), the Internet is often slow at peak times and sometimes connections are lost altogether. 

Sheth claims that reliability is one of Google’s strongest suits. “We serve mail for tens of thousands of users, we have data centres that serve one of the most used services in the world with Google.com,” he says. “Users don’t need to think about scalability.” Even so, the worry is likely to frighten off another group of corporate customers.

Analysts also wonder if Google has the expertise to support tens or hundreds of thousands of users on a system of this scale? How will it answer technical queries or respond to problems?  Stanner thinks it will struggle: “They don’t have a readily available support infrastructure and while that is not so important to the smaller company, it will  be very important to the large enterprise,” he says.

For many businesses, especially large corporations, integration with other applications is likely to be another concern. Microsoft, for example, has worked for years with SAP to enable its Office applications to work seamlessly as the front end to MySAP.

Google would like to achieve similar integration – but it is still a long, long way off. Although it is not possible now, the eventual goal is for businesses to be able to integrate the Google applications with their own, and even to manage users or data from a single point.

Google admits it would need a lot of help with this – Sheth says that a partner network is “critical”: “We want to make sure that there are other organisations or partners that come in and build applications that interact with our platform.”

In this way, Google’s plan is similar to Salesforce.com’s nascent AppExchange – an initiative that involves many different applications providers integrating with Salesforce’s online applications. Indeed, Salesforce.com and Google could end up as direct competitors.

In the meantime, Google says the level of demand for the service is high. According to Sheth, Gmail already has hundreds of thousands of users signed up.  But it is a long way from signing up free users to successfully commercialising an enterprise service.