Will Austerity Help Google and Hurt Microsoft?

Or at least this might finally force Microsoft off the desktop and into the cloud. Steve Jobs would be happy.

Google Wins Biggest Enterprise Deal as BBVA Reduces Costs

Jan. 11 (Bloomberg) — Google Inc. won its largest enterprise contract ever from Spanish bank Banco Bilbao Vizcaya Argentaria SA as the owner of the world’s most popular Web search-engine tries to win business clients from Microsoft Corp.

About 110,000 employees in more than 26 countries at Spain’s second-largest lender will start using the Google Apps offering which includes e-mail service Gmail, time-management tool Calendar, data-storage service Docs and Website-creation program Sites, the companies said.

“We are confident we can have more and more larger companies from all over the world because of the benefits we are bringing,” Sebastien Marotte, Google Enterprise vice president for Europe, said in an interview in Madrid. BBVA picked Google over other systems because of a better price, security and experience in the market, said Carmen Lopez, director for BBVA’s Innovation Observatory.

Google, grappling with slowing growth from its traditional online advertising business, is stepping up competition with Microsoft by selling business software as an alternative to Office programs. Google’s programs are accessed through the Web, just as its search engine is. Spanish companies such as BBVA, based in the northern city of Bilbao, need to cut costs and improve productivity amid a weakening economy with the highest unemployment rate in the European Union.

‘Big Name’

“This is a very important deal for Google because BBVA is a big name and it’s a first step to get other contracts from the financial sector,” said Marco Guenther, a Hamburg-based analyst at Hamburger Sparkasse. “As advertising faces more competition, Enterprise is becoming more and more important as it widens prospects for the company.”

Customers at average often save about 50 to 70 percent compared to their previous software solutions as Mountain View, California-based Google only charges for the specific programs used by a client, Marotte said.

BBVA rose as much as 1 percent in Madrid trading and was up 0.8 percent at 6.34 euros as of 11:40 a.m. Google gained 0.5 percent to the equivalent of $624.84 in Frankfurt after rising 0.1 percent in New York yesterday.

Google said the agreement is its biggest enterprise contract win so far based on the number of users. A BBVA spokesman said the contract initially runs for one year and will be automatically renewed until one of the partners wants to end it. Both companies declined to give a value for the deal.

Daimler Mapping Deal

Google Enterprise, which was created seven years ago to deliver Google products to the enterprise world, has now 4 million companies as customers and 5,000 new clients adopt the technology every day, according to Marotte.

Carmaker Daimler AG said today it signed a strategic partnership with Google to work on automotive applications. The Stuttgart, Germany-based company will get access to Google’s technology to offer drivers mapping and cloud-computing services.

Other existing Google Enterprise clients include carmaker Jaguar Land Rover, the University of Washington and the City of Los Angeles.

“Our main goal is to promote innovation and improve our employees’ efficiency and productivity,” Lopez said. “We live in a very competitive and fast-changing environment and we want to operate in a faster and more collaborative way.”

Spanish Prime Minister Mariano Rajoy announced last month 14.9 billion euros ($19 billion) of spending cuts and tax increases as public finances were in worse shape than the previous government and the EU had expected.

BBVA’s operating costs rose 9.9 percent in the first nine months of 2011 from the same period a year earlier. Technology is important to tap growth opportunities, BBVA Chief Financial Officer Manuel Gonzalez Cid said today in Madrid, according to a presentation on the company’s website.

To contact the reporter on this story: Manuel Baigorri in Madrid at mbaigorri

To contact the editor responsible for this story: Kenneth Wong at kwong11


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