On February 2024, I wrote a weblog publish declaring “You’re not switching to Google Workspace to make use of Gemini — but.” Google goals to alter that. Right now, the corporate introduced that it’ll embrace “the most effective of Google AI in Workspace Enterprise and Enterprise plans” with out the necessity to buy an add-on. (Beforehand, Gemini for Workspace plans price $20/consumer/month.) Google will now go to market with Workspace as a totally genAI-enabled productiveness and collaboration suite, in distinction to Microsoft’s $30/consumer/month Microsoft 365 Copilot add-on. Google will elevate its Workspace worth, nominally, from $12/consumer/month to $14/consumer/month.
Workforce Generative AI Can Be A Function, Not A Product
Driving increased productiveness with generative AI has been no simple activity. Approaches that embed genAI straight into the stream of labor, like Microsoft 365 Copilot and Google Workspace, see increased utilization than options that require staff to change between functions. (Who desires to compose an electronic mail in a separate browser window, then lower and paste?) However till Google’s announcement, embedded options required costly add-on licenses. Google’s daring transfer right here:
Reminds us that merchandise can evolve into options. Forrester has lengthy tracked the phenomenon of merchandise changing into options; in 2014, we wrote about how Amazon Prime turned the music enterprise right into a characteristic of its Prime platform subscription. In 2020, we wrote about how the enterprise AI market isn’t as massive as you suppose it’s, as a result of quite a lot of AI was already being expressed as a characteristic of present software program. Google is betting that the identical will occur with genAI productiveness and collaboration.
Reveals a case of a viable providing in search of monetization in different methods. Different firms on this area comply with an identical strategy. Zoom, for instance, added genAI options to its core platform with out an add-on subscription. The strategy assumes that worth could be captured by way of increased market share (buying clients) and retention (decrease churn) results. Google, with its small footprint, must be centered on the previous.
Tempts us to say that Google failed, but it surely may very well be a aggressive boon. Some headlines will probably name this “commodification” or say that Google merely gave up as a result of it couldn’t promote Gemini for Workspace. Whereas there’s a component of fact to each, Google’s gross sales channel and clients could nicely have a good time. The transfer immediately refocuses Google’s worth proposition and pricing, although, as we’ll see, it nonetheless gained’t be for everybody.
Google Workspace Belongs In Some Buying Discussions
Yesterday, we launched a brand new report, How To Construct A Pragmatic Microsoft 365 Copilot Program, wherein we argue that making Copilot priceless faces quite a few obstacles, from measuring ROI to technical and efficiency challenges to a excessive worker coaching burden that isn’t being met. So M365 Copilot has vulnerabilities. However Workspace does, too; the coaching burden applies equally to staff utilizing Gemini options, for instance.
It’s probably nonetheless not time so that you can swap from Microsoft 365 to Google Workspace. However we additionally consider that:
Google Workspace will grow to be extra aggressive with Microsoft 365. Engaging pricing issues, particularly when, at its new worth, Google brings credible efficiency, a small however nontrivial roster of enterprise shoppers, and in addition some differentiated genAI options (together with the progressive NotebookLM and Vids, a video-creation genAI instrument).
Microsoft 365 is embedded and has enduring strengths. Regardless of Google’s attraction, Microsoft 365’s ubiquity and high quality stay laborious to dislodge. Migrating M365 paperwork, SharePoint websites, and macros to Workspace stays a monumental effort. Plus, Microsoft 365 and M365 Copilot have real advocates amongst consumers. Along with Copilot Studio, a variety of Microsoft Azure companies and improvement instruments permits enterprises to create a variety of functions. More and more, these functions could be accessed from inside Copilot.
Microsoft will, nonetheless, really feel pricing strain. Constructing a enterprise case for M365 Copilot that convinces the CFO to broaden licenses broadly stays difficult. At most organizations, cohorts of customers abandon Copilot, resulting in worker license transfers, increased than anticipated coaching burdens, and fewer than productive outcomes. How lengthy can Microsoft maintain the road — and for the way lengthy — on $30/consumer/month? We’re betting the pricing technique evolves.
Subsequent Steps For You? Let’s Discuss
You must think about Workspace in case you are: 1) a startup (firms ranging from scratch with little Microsoft legacy usually tend to undertake); 2) an SMB (small and medium companies want fewer options and are extra price-sensitive); 3) prepared to phase your workforce (particular departments may profit, even when the remainder of the corporate makes use of Microsoft 365); and/or 4) in want of particular Google improvements, like Vids or NotebookLM. However no matter whether or not you’re already knee-deep in M365 Copilot, contemplating Workspace, or nonetheless haven’t jumped into any of those instruments, your subsequent steps will rely in your sources, wants, and AI readiness. Attain out to schedule a steerage session with me, and let’s get you the place it is advisable go.
