Alphabet Inc's Google has struggled for years to get big businesses to embrace G Suite, its hip alternative to Microsoft Office.
Microsoft dominates the US$15 billion market for business productivity tools for a reason: Its longstanding product is reliable and IT managers have little incentive to gamble on something new.
Still, Google has made inroads by throwing more resources at this lucrative market and finally listening to its business customers.
Since Google got serious about developing features for major enterprises two years ago, the number of organisations paying for G Suite has doubled to more than 4 million, a new figure expected to be highlighted in Alphabet's earnings announcement.
Most of those customers are small and medium-sized companies. But some big names have signed on too. Verizon Communications, Nielsen Holdings and Colgate-Palmolive alone have brought about 250,000 workers to G Suite over the past 15 months, according to the companies.
Other big firms are now giving it a serious look, said Jeffrey Mann, an analyst at research firm Gartner.
"I have been talking to traditionally conservative companies in government, aerospace, financial services" that are considering buying G Suite, Mann said. "That would not have happened two years ago."
G Suite may never be an Office killer. Just 15 companies listed in the S&P 500 currently have Google's business tools, according to a review of public email server data by Reuters.
Its US$1.3 billion in G Suite sales ranked a distant no.2 behind Office's US$13.8 billion, according to 2016 data from Gartner.
But Mann and other analysts say that second place is not a bad spot. Smartphones and artificial intelligence have opened up new opportunities for Google to get on the radar of corporate IT departments even if it never tops Microsoft, they said.
A robust G Suite is a cornerstone of Google's efforts to diversify revenue, which overwhelmingly comes from online ad sales.
At a minimum, Google is loosening loyalty to Microsoft at a time when the Redmond, Washington-based giant also faces competition from start-ups such as chat service Slack that offer specialised online business tools.
Google's low-cost, subscription-based G Suite has also pushed Microsoft to adopt a similar strategy with Office 365, an online version of its popular software.
Okta, a leading provider of security software, said G Suite usage among its nearly 4,000 customers rose 49 per cent year-over-year in the 12 months ended 31 October, compared to 40 per cent growth for Office 365.
G Suite’s enterprise focus “is paying off,” Okta said in a report last month. Yet Office 365 remains the most popular service among Okta's customers, hundreds of which are larger enterprises.
Among companies listed on the broader S&P 1500 index, 11.5 per cent moved to Office 365 in the last two years, according to an email records review by investment firm Winton Group Ltd. That outpaced G Suite, which saw 6.8 per cent of those firms come its way, including technology, industrial, entertainment and retail companies.
"They are putting people in place, but there’s still a lot of work for Google to begin growing their business in those larger accounts," said TJ Keitt, a workplace software analyst at Forrester Research.
Schools and startups had been Google's top business suite users since the package debuted in 2006. They liked the low prices and collaborative features such as the ability for multiple users to edit a single document simultaneously.
By 2012, Google sought bigger, more profitable clients. But it offered minimal handholding, leading companies to doubt its long-term interest. That changed in 2016 when Google brought in new leaders and rebranded its business apps as G Suite.
Non-paying users of Gmail, Docs and other productivity tools still make up the lion's share of Google clients. But its priorities are clear. About 80 per cent of nearly 250 new G Suite features introduced last year, including an automated tool for redacting sensitive data from files, were primarily aimed at paying enterprises, according to Google.
Prabhakar Raghavan, a vice president overseeing G Suite, told Reuters that Alphabet's board decided to "bet big" on the enterprise sales effort and cleared his unit to spend freely.
"It's no longer one employee at a small startup administering us," Raghavan said. "These are demanding chief information officers. They are not going to come on a website and click a 'buy' button."
He said Google engineers meet regularly with corporate executives and rely on business customers to test features.
Close interaction with Nielsen, for example, led Google to add corporate templates in Docs and put third-party content embedding into its internal web page builder Sites, the companies said.
More recently, Google said it postponed the launch of new search technology for businesses to add complex filtering that large customers requested.
"The focus isn’t any longer, 'We're Google. We know what’s best for you,'" Mitch Greenwald, managing partner at G Suite sales partner Cloudbakers, said of the new attitude.
Still, Raghavan acknowledged the difficulty of getting IT pros to break up with Microsoft.
"Undeniably, there is an incumbency, a legacy of organisations growing up using Microsoft" to just stick with it, Raghavan said. "There's a retraining that needs to go on."
Google can win on price. At US$25-per-user monthly for a major enterprise, it is US$10-a-head cheaper than Microsoft Office's top list price.
Demographics have helped too. Young adult workers who used Gmail and Google Docs growing up are natural business adopters. Last month Google announced a new paid version of G Suite aimed at the workforces of universities and schools.
"There's people who have gone through their entire college career with G Suite and now have to learn Office," said Mark Sami, vice president at tech consulting firm SPR, which helps businesses install Microsoft software.
If Microsoft is worried, it is not saying. Microsoft spokespeople declined to discuss G Suite's growth, saying instead that Office continues to attract users.
Business sales of Office 365 surged more than 40 per cent in each of Microsoft's last three quarters compared to year-earlier periods, accounting for most of the more than US$7 billion in quarterly Office-related revenue.
Both Microsoft and Google have sought to allay clients' privacy concerns, certifying that data remains in customers' control and will not be used for advertising.
"That barrier has been taken away for most organisations," SPR's Sami said.
Google's enterprise unit, meanwhile, has gone on a hiring binge, opening its own campus in Sunnyvale, California. It is yet another sign of its commitment to G Suite, analysts said.
"To show that there's more and more features being released, that ups the ante in the pot," Gartner analyst Craig Roth said. "They are less and less likely to walk away from this."
(Reporting by Paresh Dave; Editing by Marla Dickerson)