Google Launches Fee-Based Biz Apps

Google dropped yet another shoe Thursday.

As of midnight, the company has added its Web-based word processor and spreadsheet to its existing apps packet and is selling the resulting bundle into business accounts. The move has been widely expected.

For $50 per person per year, Google Apps, Premier Edition gives a business Google "Docs and Spreadsheets" plus GoogleTalk instant messaging/VoIP, Gmail, Google Calendar, and Web page creation tools. Each user also gets 10 gigabytes of storage, a five-fold increase over the free, ad-supported version.

The company will continue to offer that freebie, which has been available since August as Google Apps For Your Domain. It will also offer the business version of the applications free to students. All of the bundles now include the spreadsheet and word processor.

A company executive was careful not to state what nearly everyone else seems to believe: That this business applications suite is a broadside fired on the Microsoft Office franchise.

For one thing, there is no on-line (aka disconnected) capability, although Google might consider adding that down the line, said Rajen Sheth, product manager for Google Enterprise. Instead, users can save their Google work in virtually any of the popular word processing and spreadsheet formats.

Google employees themselves use Microsoft Office, and the company sees Google Apps as a way to ease collaboration on documents and spreadsheets, Sheth said. As such, they see a scenario in which business users utilize both local applications and Web-based apps in a cooperative scenario.

But, companies weary of what some see as pricey Office upgrades might be tempted to forego them and use Google's offline capabilities along with existing applications, some VARs said. Estimated retail price for the Office 2007 Professional edition is $329 as an upgrade. Even the least expensive Home and Student Edition of Office is $149. And, not many volume-based discounts will bring Office down as low $50 per user.

Microsoft's lengthy list of Office 2007 SKUs may also prove daunting to some buyers who would prefer to see a straight-and-simple desktop applications purchase.

Google Apps sales will be direct: There is no role for traditional resellers. However, Sheth said he foresees good opportunities for VARs and integrators needed to tie the Google apps into corporate directories and other infrastructure. The company is offering APIs for data migration, provisioning, single-sign-on and mail gateways.

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Vendor partners offering integration to the apps include Avaya and Postini. Salesforce.com, already allied with Google in some areas, is also a new customer. As is Procter and Gamble, according to Google.

The Google Apps fee includes 24 by 7 phone support and guaranteed 99.9 uptime for Gmail, Google said. . Google has blazed a trail for the so-called "Web 2.0" generation of applications. But it is also starting to build a network of partners for its search appliance, particularly targeting VARs with Microsoft SharePoint expertise.

Several Microsoft partners said they are impressed with the support they are getting from Google. One long-time Microsoft VAR said he's gotten more qualified leads from Google in the past year—he called them "pre-sold deals"—than he's had from Microsoft in five years.

Given the level of paranoia about Google technology in Redmond, Wash., Microsoft may have to worry that Google is stealing its thunder among partners as well, this VAR said.

That would be ironic given Microsoft's partner-centric history compared to Google's direct-sales or ad-sales focused software-as-a-service orientation.

It is probably no coincidence that Microsoft has slated an analyst-only call on its "vision and strategy for Software + Services" for Thursday afternoon. The call will be hosted by Charles Fitzgerald, general manager for Microsoft's Platform Strategy Group.

Despite huge investment in its "Live" search capability, Microsoft has made little headway in Web search, according to recent Comscore figures. (For earlier figures, see this site.)

Microsoft executives have maintained they're satisfied with their progress in search, especially inside corporate firewalls. The conventional wisdom is that Microsoft is attacking Google's search base while Google is counterattacking on the desktop apps front.

Microsoft is also prepping an array of hosted SharePoint-based services for small businesses under its Office Live brand as well as more consumer-focused hosted services under its Windows Live rubric.