Google Grabs Nielsen as Business Apps User From Microsoft

The transition, previously undisclosed, is a rare win for Alphabet Inc.’s Google in an uphill battle for corporate software customers against long-time leader Microsoft.


July 31, 2017

3 Min Read
Two office workers walking down a hallway with Google logos hanging on the wall

(Bloomberg) -- Kim Anstett made an unusual decision for a corporate technology buyer. Several months ago, the chief information officer of media measurement firm Nielsen Holdings Plc, moved 56,000 employees from Microsoft Corp.’s business software to Google.

For word processing and spreadsheets, Nielsen staff now uses Google Docs and Sheets instead of Microsoft’s Word and Excel applications from its familiar Office suite of software. For video conferencing and messaging, Nielsen dropped Microsoft’s Skype in favor of Google equivalents.

The transition, previously undisclosed, is a rare win for Alphabet Inc.’s Google in an uphill battle for corporate software customers against long-time leader Microsoft. Google’s package of workplace productivity tools, G Suite, is a distant second, while Microsoft commands nearly four times the market share, according to Gartner Inc. Yet Google is courting clients aggressively, part of executive Diane Greene’s effort to turn the cloud division into a substantial revenue generator.

Younger workers help. Anstett said around 60 percent of Nielsen’s employees are under 35, an age group that’s familiar with Gmail and Google Docs. That convinced executives to spring for the paid versions. 

"Those millennials are coming to Nielsen with experience coming up on Google," she said. "We’re actually seeing that as a great recruiting tool."

As with its cloud computing service, Google doesn’t disclose sales of business software. Prabhakar Raghavan, who runs G Suite, said the division now has more than 3.5 million paying customers, up from over 3 million in January. 

The stakes for success of Google’s overall cloud division are growing. Alphabet’s second-quarter sales met analysts’ projections this week, but the shares fell on concern Google’s main sources of growth -- mobile and video advertising -- are less profitable than its original desktop web search business.

In the past, G Suite has had better luck signing younger companies, although it has recruited some marquee customers, such as wireless giant Verizon Communications Inc. Other new customers, like Nielsen and Netflix Inc., have asked for more capabilities in document sharing and video conferencing, according to Raghavan. "They’re almost dragging us along," he said. 

Getting Fortune 500 companies to trust a mostly consumer-focused company with the more-rigorous demands of workplace software remains Google’s biggest hurdle, according to Raghavan. Last month, his boss, Greene, got the company to stop scanning emails for ad targeting on the free version of Gmail primarily to reassure corporate customers of the paid product.

In Microsoft, G Suite has an entrenched and formidable foe. Gartner analyst Craig Roth estimates that G Suite got $1.6 billion in sales in 2016, while Microsoft’s cloud-based Office 365 pulled in $5.7 billion. The research firm released a report earlier this week ranking the broader corporate IT vendor market, for the first time placing G Suite in the top bracket based on criteria like security, compliance and controls.

Both Microsoft and Google are rolling out features for more fashionable office trends, like remote work and consumer-style applications. But Google’s offering forces customers in this direction more than Microsoft’s, said Gartner’s Roth. "With Office 365, you can work in clever new ways, but, as a crutch, you can always work the same way you did in 1995," he said. G Suite "is solely focused on new ways of working."

And both companies face competition from upstarts. Nielsen has tinkered with Google’s Hangouts Chat, a revamped version of its messaging application similar to the work communication service from Slack Technologies Inc. Nielsen’s staff enjoyed it, Anstett said, for its "Slack-like features." Microsoft is working on a Slack competitor too.

Nielsen also uses a Jamboard, Google’s new $5,000 digital whiteboard that projects its apps on a 55-inch screen. Nielsen bought 10 of them.

It has not yet, however, bought Google’s cloud-computing offerings, which the search giant is trying to sell in tandem with its work apps. Instead, Nielsen rents storage and computing power over the internet from Amazon Web Services and Microsoft. Anstett said she’s in "conversations" with Google. She declined to share whether Google offered a discount for G Suite. "Obviously, for the company, it’s important that my spend didn’t go up," she said.

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