Google enterprise is something to fear

July 5, 2012: 10:30 AM ET

Competitors not taking Google's attempts to make inroads in enterprise software are kidding themselves. They should be worried.

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More than just this.

FORTUNE -- Google has long been criticized for a lack of focus, and some doubt its commitment to enterprise customers.But the company formerly known as a search engine believes that it's got the right approach -- build great consumer tools and corporate customers will eventually follow -- even if it takes years for its products to catch on in the workplace.

Amidst all of the stunts and theatrics at last week's Google I/O conference, the company announced a handful of noteworthy upgrades and offerings geared toward enterprise customers. At the top of the list was the launch of Google Compute Engine, an infrastructure-as-a-service (IaaS) product that lets developers run their applications on Google's (GOOG) high-performance servers. The company also unveiled a few business-friendly upgrades to Google Apps, like the ability to edit documents offline, and the availability of the Chrome browser on Apple (AAPL) iPhones and iPads.

Google's Compute Engine is late to the game, but it's a logical step for the company for the same reason that it made sense for Amazon (AMZN), an online retailer, to launch its cloud computing platform years ago. Amazon doesn't break out revenue from its remote computing services, but it's estimated to have contributed about $940 million in sales last year. And Google Compute isn't just a potential moneymaker for Google, which like Amazon already has massive computing and storage infrastructure in place. It's also a way to get developers on its team -- a valuable play for competing with other rivals like Microsoft (MSFT).

MORE: Is this what a "focused" Google looks like?

"This is an area which is core to us, and we are making a deep, long investment here," Sundar Pichai, senior VP for Chrome and Apps, says of Google Compute. "We think for the long haul."

Pichai says Google's approach to the enterprise market has gone through an "evolution." Most products still start out on the consumer side but Google now has a dedicated enterprise sales and marketing team. And, Pichai argues, the lines are blurring between consumer and business. Case in point: Its Android operating system took time to grow among consumers. But now the company is starting to see signs of its acceptance in the workplace.

This isn't an entirely new concept. Back in 2004, before "consumerization" was a buzzword, Google's Gmail started out as an invite-only email service for consumers. It then slowly made its way into the workplace. Large corporate customers like Genentech were early adopters, but the vast majority of Gmail customers are smaller businesses. Still, Google says five million businesses across the country now use it.

MORE: As Google launches products, regulatory woes linger

Of course, like many Google products, some of the offerings that make it into the enterprise will flop. Google says it's making a long-term investment in Chromebooks. Good thing, because it will likely be years before these lightweight laptops gain any significant traction among businesses, if it ever happens at all. (Even with offline editing they still have very limited functionality for enterprise users.)

But Google's attempt to enter the enterprise is serious, even if it isn't entirely polished. And the company's forays into seemingly unrelated products are almost as integral to its culture and identity as, well, its search engine. So what's next, a fully encrypted, password-protected version of Google Glass for the enterprise? Probably not anytime soon. Then again, it wouldn't be much of a surprise.

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About This Author
Michal Lev-Ram
Michal Lev-Ram
Writer, Fortune

Based in Silicon Valley, Michal Lev-Ram covers enterprise and mobile technologies for FORTUNE. Prior to joining FORTUNE, she wrote for CNNMoney, Fast Company, Popular Science and other business and technology publications. She was also a staff writer at Business 2.0 and holds a B.A. in journalism from San Francisco State University.

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