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For Google, the unified communications market is a means to an end: keeping G Suite competitive with Microsoft's Office 365. In 2020, Google plans to close in on the Microsoft suite's core communication features by migrating businesses to Hangouts Chat, the messaging complement to G Suite's calling and video conferencing apps.
In mid-2020, Hangouts Chat will replace an older, more basic chat app called Hangouts. While the new app is an improvement, Google will have to add features and build a much larger partner ecosystem to reach par with Office 365.
What's more, Google's strategy of maintaining separate products for core communications services is at odds with the direction of the market. Vendors like Microsoft have consolidated calling, messaging and meetings services into a single user interface. But Google is keeping Hangouts Chat distinct from the video conferencing app Hangouts Meet.
"Their challenges are more related to fundamentally who they are," TJ Keitt, an analyst at Forrester Research, said. "They're a company that, for a while, had struggled to indicate they understand all the things that large enterprises require."
G Suite has trailed Office 365 for years. In particular, Google has struggled to appeal to organizations with thousands and tens of thousands of employees. Those customers often require complex feature sets, but Google likes to keep things simple.
"It's really important for us to provide just really simple, delightful experiences that work," Smita Hashim, manager of G Suite's communications apps, said in December. "It's not like we need every bell and whistle and every feature."
In 2019, Google tackled low-hanging fruit that had been standing in the way of selling G Suite to customers with thousands of employees. Giving customers some control over where their data is stored was a significant change. Also, adding numerous IT controls and security backstops was critical to enterprises.
But Google does not appear interested in matching Office 365 feature-for-feature. Instead, analysts expect the company will seek to grow G Suite in 2020 and beyond by focusing on specific industries and kinds of companies.
"If Google plays the long game, they don't need to really worry about whether or not they are beating Microsoft in a lot of the companies that are here right now," Keitt said. Instead, Google can target new and adolescent companies that haven't bought into Office 365.
Google's targets will likely include the verticals of education and technology, as well as fast-growing businesses with a young workforce. The company has already won some big names. In 2019, G Suite added tech company Iron Mountain, with 26,000 employees, and Whirlpool, with 92,000 employees.
In 2020, Google needs to decide whether to get serious about building a communications portfolio on par with Microsoft's. That would entail expanding the business calling service it launched this year, Google Voice for G Suite.
So far, the vendor has signaled it will keep the calling service simple. Whereas traditional telephony systems offer upwards of 200 features, Google opted for fewer than 20. The new year will likely bring only incremental changes, such as the certification of more desk phones.
"I think, incrementally, they are continuing to improve. They are trying to close the gap," said Irwin Lazar, an analyst at Nemertes Research. "What I haven't seen Google really try to do is leapfrog the market."
Nevertheless, the cloud productivity market is likely still a lucrative one for Google. As of February, 5 million organizations subscribed to G Suite, some paying as much as $25 per user, per month.
Google Cloud, a division that includes G Suite as well as the vendor's infrastructure-as-a-service platform, was on track to generate $8 billion in annual revenue as of July.
"Being number two in a multi-billion-dollar [office productivity] market is fine," said Jeffrey Mann, an analyst at Garter.