Three weeks into his tenure at Google, Rajen Sheth -- former Microsoft and VMware employee -- met with Larry Page, Sergey Brin and Eric Schmidt to propose a way of turning Gmail into a business-class e-mail system. And he was soundly rejected.
Today, Google Apps -- which began life as "Gmail For Your Domain" -- is giving Google a small foothold in the enterprise IT world, and sparking a fierce rivalry with Microsoft.
Google Apps vs. Microsoft Office
But in 2004, Sheth's early attempts to bring Gmail into the enterprise were stymied, as Google's trinity of leaders in Page, Brin and Schmidt challenged him to come up with something better.
"At the time I was soundly rejected," Sheth said during an interview in mid-June at Google's headquarters in Mountain View, Calif. "Because at the time we were proposing the idea of bringing Gmail into an appliance and have it be an on-premise solution for businesses. They rightly pointed out that we could do that, but we're not fully taking advantage of everything we have here at Google. And at that time, too, the idea of a cloud model was very much not on the minds of any CIO anywhere."
Even before joining Google, Sheth worked on some of the most well-known products in the IT landscape, both on the consumer and enterprise side.
In 1999 and 2000 he was a program manager for Hotmail, owned by Microsoft, where he led the effort to create Hotmail's first spam filter. The Stanford University graduate later spent a year at VMware, where he was product manager for VMware's ESX Server.
The storage company EMC purchased VMware in January 2004, and Sheth helped lead integration efforts between the two companies but ultimately left in July of that year to join Google's newly created enterprise division, where he is now the Google Apps senior product manager.
Slideshow: Visiting the Googleplex
"It was probably the toughest decision I've ever had to make because VMware was doing fabulous at the time, and Google was taking off," Sheth says. "One of the things that really attracted me was this idea of being able to go into a completely new market with a lot of great technology at Google."
Sheth's charter was "to figure out how we can take some of the other technologies within Google, specifically around collaboration and communication, and bring it into the enterprise."
Sheth was joined by enterprise division leaders Matthew Glotzbach and Dave Girouard when he proposed Gmail For Your Domain to Brin, Page and Schmidt. Although that first meeting ended in frustration, it was only temporary.
"In May of the following year I brought it back to them, and said 'let's do a cloud-based hosted infrastructure for businesses [instead of a physical appliance] and start with Gmail, but as we have more applications we'll bring more apps into the suite,'" Sheth says.
Gmail For Your Domain launched in an invitation-only beta in February 2006, letting organizations -- mainly small businesses and universities -- use an entirely Web-based e-mail system with a personalized domain name.
The expanded Google Apps for Your Domain launched later in 2006 and by February 2007 Google had created an enterprise version of Google Apps. Another key moment in 2007 was the acquisition of Postini, which helped Google incorporate spam filtering and virus blocking into the Apps suite.
Today, Google Apps includes Gmail, Google Calendar, Google Docs, Google Sites and several other applications in a cost-friendly package of $50 per user per year. The individual apps are still free to consumers.
"More than two million businesses run Google Apps," the company boasts, but Google is still a long way from displacing Microsoft as the king of the business e-mail and collaboration market.
An IDC survey in July 2009 showed that nearly 97% of businesses were using Microsoft Office, and 77% were using only Microsoft Office. Nearly 20% reported extensive use of Google Docs, but not at the exclusion of other tools.
Google's adoption figures have likely risen since then, but even Google's marketing has at various times described Google Apps as a technology that is complementary to Microsoft Office, rather than one that could completely replace it.
There was some controversy recently when Google reportedly began stripping Windows out of its own offices in favor of Linux, Macs and Google's own forthcoming Chrome OS.
But Sheth says numerous Google employees still use Microsoft Office and have no plans to switch.
At Google's offices in Mountain View, "we have people using [Microsoft] Office, we have people using exclusively [Google] Docs, and we have people using a mix. It really depends on the user," Sheth says.
People who tout Microsoft's capabilities over Google's are likely to cite several reasons, such as difficulty importing Microsoft documents into Google Apps without losing formatting, and disparity between the features of spreadsheet creators.
Sheth acknowledges that Google Docs can't meet everyone's needs as it stands today.
"If you are a financial analyst and you have a massive spreadsheet that is intrinsically linked together in very complicated ways, and you're doing particular models and things like that, we probably don't meet that need yet," Sheth says. "I think there are similar things in other areas. [Microsoft] Office has a tremendous amount of functionality. There are going to be pockets of the enterprise in the long term that would not necessarily be able to use Google Docs for anything."
That being said, Google has succeeded because many business users need only a small amount of the functionality offered by Microsoft, and may be fully satisfied by what's in Google Docs. Google is continually adding to Apps so it can meet the needs of a larger percentage of users, for example by upgrading Docs to improve the quality of documents imported from other programs.
"We now have that ability to represent a more complex document in a Web browser. As a result of that, the import experience is a lot better and the export experience is a lot better," Sheth says. "What we've focused on is how do we make the Docs suite better, such that more people can use that as their primary office productivity tool."
Sheth has good things to say about Microsoft, stemming from his time as a Hotmail program manager.
"Microsoft is a great company, just like Google is," he says. "In a lot of ways the product teams at Microsoft and the product teams here are very similar. A lot of very, very sharp people, and a really solid, quality organization. And you know, I think the operating model isn't all that different, but I do think the philosophies are very different in terms of where we see technology going, and where we're investing in technology."
Microsoft still relies on on-premise deployments of packaged software for most of its revenue, but has been pushed into the cloud by rival Google. Microsoft now offers Office Web Apps, a Web-based version of the Office productivity tools, and the Business Productivity Online Suite, which lets businesses host their Exchange and SharePoint servers in the Microsoft cloud.
Microsoft's cloud strategy may be "all in," as CEO Steve Ballmer says, but Google has not stood idly by.
Sheth takes a subtle shot at Microsoft when he says "if all we did was make Office, as it is, in a Web browser, there's not a whole lot of value there."
Microsoft's Web apps "are very good for viewing, and not as good for editing," he continues.
Google is trying to enable collaboration between employees who use Google Docs and those who use the non-cloud version of Microsoft Office, in part by acquiring DocVerse, which brings the collaborative functionality of Google Docs to Microsoft Office.
"It's an Office add-on," Sheth says. "The idea there is we could be working in Microsoft Word together, but the document actually resides on the server on Google Docs."
Because of this integration, Sheth says, organizations can let users pick whichever tool they want and still be able to work together while gaining the benefit of Google's real-time collaboration, which lets users collaborate on a document and see each other's changes immediately.
"We now have character-by-character recognition," he says. "I'll see a cursor in the document where you are and as soon as you type something I see it on my side."
Google's biggest challenge, most likely, is convincing customers with complex legal requirements that it's safe to move e-mail and collaboration systems into the cloud. Many companies want assurances that their data won't be moved outside certain legal jurisdictions, but Google's systems are designed to move data from country to country at will in order to provide the best possible experience for users, possibly running afoul of government regulations.
"If you travel, you'll get a good experience because you're connected to our data centers [in whichever region you've traveled to]," Sheth says. "You could connect to that Google data center and we'll route the data accordingly to be able to get it to you."
That being said, Google has complied with the United States and European "Safe Harbor" framework, and is building a government cloud to meet the specific needs of customers in the public sector.
Certain government regulations, such as the International Traffic in Arms Regulations (ITAR), prevent customers from storing data in Google Apps, but Sheth says Google has built interoperability bridges so companies can keep ITAR data outside of the Google cloud while still using Google Apps to collaborate.
The biotech company Genentech has adopted Google Apps, Sheth notes, despite having to comply with various legal requirements specific to the healthcare field. "You name the vertical, we have a customer in that vertical," Sheth says. "Even in things like financial services and healthcare."
Many of those customers have not publicly admitted they use Google Apps, however. If you go to the Google site that lists customer success stories, you won't see any in the financial services field.
But the IT industry is clearly seeing a shift toward cloud computing for many types of applications, particularly those that focus on end user experience. Besides services like Google Apps, Sheth says the proliferation of new types of devices, such as netbooks, tablets and Android phones, will ultimately drive a complete overhaul in the way users interact with their data and applications.
"The way things are going to be in the future is we'll each have multiple devices," Sheth says. "You may have a desktop computer at work, you might have a $200 netbook you carry around, or a tablet computer you carry around to meetings like this. "You may have a mobile device you do a good portion of your work on. Things like Chrome and Android are revolutionizing that. It will give businesses and users a choice of what kinds of devices they want to use. You don't necessarily have to put a laptop onto every desk in your corporation. You as a user don't necessarily have to carry your laptop around wherever you go. You have choices in terms of having the right device for the right setting."
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