The one thing that I find most infuriating about Google Inc. (NASDAQ:GOOG) is how the company's executives can look people in the eye and deny the obvious.

Take the recent announcement about its plans to sell a suite of software to business customers. Doesn't that encroach on the turf of Microsoft Corp. (Nasdaq:MSFT). Chief Executive Eric Schmidt artfully ducked that question when it was posed by the Associated Press. We don't operate that way," he said. "We are trying to solve very different problems."

No one believed it when he said the same thing about eBay Inc. (NASDAQ:EBAY) when Google Checkout was released. Google would probably answer the question the same way if the AP asked about what threat the bundle may pose to International Business Machine Corp.'s (NYSE:IBM) Lotus unit.

There is some truth to the statement, however, Google's software bundle, which sells for $50 a year, has nowhere near the functionality of Microsoft Office. The same holds true for Google Checkout when compared with eBay's PayPal. Google's offerings though are designed to be used instead of something else, so any talk that the company isn't in competition is laughable.

But before people start pontificating about the threat Google poses to Microsoft, a reality check is in order. Google's product development outside of search hasn't been that impressive. .

Schmidt told the AP that search engine giant priced the software so cheaply to tempt companies to give it a shot. Software doesn't sell based on price alone. Large enterprises demand bang for their buck with functionality and tech support.

Chief information officers know that you get what you pay for from tech companies. Plus, many are reluctant to allow employees to use web-based applications for security reasons.

The companies referenced In Google's announcement got something in return from the search engine giant like free service or keyword advertising. Investors should never take the statements from customers in product announcements seriously.

Continue reading Google does compete even though it says otherwise

Google does compete even though it says otherwise originally appeared on BloggingStocks on Thu, 22 Feb 2007 09:33:00 EST. Please see our terms for use of feeds.