3 Ways Alphabet Is Gunning for Microsoft and the Enterprise Market

a man in a suit in an office aims a paper airplane.

The world of enterprise software and systems can make for very stable businesses, and therefore great investments. Enterprises, especially large ones, undertake significant security and business risks if they choose to switch vendors or systems. It's one of the reasons behind the rise and incredible staying power of Microsoft 's (NASDAQ: MSFT) Windows operating system for the past 30 years.

But recently, the space has gotten competitive -- not just from start-up companies but also from cash-rich tech giants that had initial businesses in different fields, such as e-commerce giant (NASDAQ: AMZN) and Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) . In fact, Alphabet has been increasing its focus on serving large enterprises, which could threaten Microsoft's Windows franchise. Here are three ways Alphabet is taking on the industry.

Android Enterprise Recommended

These days, workforces are becoming increasingly mobile, and Alphabet has the largest consumer mobile operating system in Android. By providing more mobile solutions for workers, Alphabet has an angle toward providing enterprises with even more of their computing needs.

Last week, the company unveiled its Android Enterprise Recommended list of hardware vendors, which provides guidance for IT departments to implement a unified set of devices for mobile employees. The recommended list includes vendors that have minimum hardware, application, and security specifications, which can be dispatched in bulk deployments by IT departments, along with consistent software updates.

Said Alphabet Enterprise Director David Still: "Mobility has been critical to digital transformation for enterprises. We have listened to our customers and partners, and believe that the Android Enterprise Recommended program will help simplify and add confidence to decision making, allowing global IT leaders to focus more on their core business."

The initial list encompasses six large hardware vendors, along with Alphabet's own hardware, including the Pixel, Pixel XL, Pixel 2, and Pixel 2 XL.

Android-Chrome convergence?

With the renewed efforts to make Android devices more of an enterprise solution, speculation has arisen about a possible convergence of Android and Chrome OS, Alphabet's other operating system. Chrome OS, which has been around since 2009, was initially sold in lightweight notebooks that functioned mostly through a Web-browser interface via the cloud, as opposed to using an internal hard drive. Chromebooks made especially big inroads with K-12 schools, where they have roughly 60% market share today.

Thus, Chrome has two big things working for it today. One, a whole generation of young adults have been Chrome users in school and are now entering the workforce. Second, more and more enterprise applications are being delivered via the cloud, which suits Chromebooks' cloud-based design.

Last summer, Alphabet unveiled Chrome Enterprise, with features such as an enterprise application storefront, as well as increased security and support features. In November, Microsoft Office apps became available on Chrome via the Android app store, further positioning Chrome to become a serious enterprise contender.

In addition, Alphabet has hinted at efforts to further integrate the two platforms, in a continuation of efforts that have allowed Android apps to be used on Chrome devices for the past three years. The company has been continuously tinkering with making Android and Chrome more integrated, and there are even rumors that Alphabet is working on a new open-source system called Fuchsia , which will essentially be a convergence of the two.

That may not come to fruition, but it's yet another indicator that Alphabet is increasingly trying to merge its leading mobile operating system -- something Microsoft doesn't have anymore -- into a new lightweight and mobile enterprise computing platform.

The cloud

Finally, Alphabet has been making substantial investments in the cloud. Despite the company's well-known prowess with artificial intelligence and data centers, it has lagged behind leaders Amazon and Microsoft so far. Amazon was a first mover in the space, and Microsoft was able to leverage its long history of enterprise relationships to develop a strong second-place cloud business.

But Alphabet claimed it was the fastest-growing public cloud platform last year, albeit off a smaller base, and said it was investing heavily in both sales and tech for cloud computing, hoping to convince businesses large and small that its offering is just as enterprise-ready as those of the other guys.

Long-term vision

Putting these three pieces of the puzzle together -- Android Enterprise, Chrome OS, and Google Cloud Platform -- one can see that Alphabet is aiming to become a serious enterprise provider. The company groups its cloud and hardware revenue together in what it calls its "Google Other" segment, which grew 37.7% in the fourth quarter to $4.7 billion. Still, given the significant progress Alphabet has made over the past year, that may only be scratching the surface.

10 stocks we like better than Alphabet (A shares)

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Alphabet (A shares) wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of February 5, 2018

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Billy Duberstein owns shares of Alphabet (C shares), Amazon, and Microsoft. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Amazon. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.