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Google Launches Google Apps Reseller Program

Google is launching a reseller program for Google Apps that will allow VARs to pay upfront and bill customers directly, but the search giant's lack of channel experience is an issue for some solution providers.

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The program, which pits Google Apps against Microsoft's budding portfolio of SaaS applications, offers VARs a 20 percent discount and the ability to receive recurring revenue on a product that Google has primarily sold directly to customers in the past.

Google partners will receive $10 per year on a $50 per-user, per-year subscription fee, and they'll also maintain the billing relationship with the customer and pre-pay Google in advance for each one-year subscription. Partners will also be able to add their own services and bill customers on a monthly, quarterly or annual basis.

Solution providers in the program can now begin marketing, sales and technical training, and Google expects transactions to start in March, said Stephen Cho, director of Google Apps channels.

Google is betting that its productivity suite will win over VARs that have grown tired of waiting for Microsoft to release a Web-based counterpart to its Office packaged software suite. Microsoft offers e-mail and instant messaging through its Windows Live Essentials suite and plans to include Office Web Applications—lightweight versions of Word, Excel, PowerPoint and OneNote accessible through Web browsers—in the next version of Office, which is due sometime in early 2010.

Google believes that in addition to offering a superior office productivity suite, its channel program compares favorably with that of any other SaaS vendor in the industry, including Microsoft, said Cho. That's a bold statement considering that Google's channel background is limited to its July 2007 acquisition of security firm Postini and to sales of its Enterprise Search Appliance.

The Google Apps reseller program includes an authorized logo program, a reseller listing on the Google Apps site and a structure aimed at encouraging Google's direct enterprise sales force to work with partners. But the program doesn't include a deal-registration component to protect partners from being undercut in deals at the last minute by a competitor, or even Google itself.

For VARs that attempted to work with Google after the Postini acquisition but were frustrated by the company's lack of channel experience, that's a deal-breaker.

"My sole experience working with Google so far has been via their Postini offering, and that interaction taught me that Google hasn't figured out how to work with partners or resellers yet," said Michael Cocanower, president of Phoenix-based solution provider ITSynergy. "Frankly, I have no desire to go through the pain of trying to work with them while they figure things out."

But while the margins around Google Apps aren't huge, the opportunities surrounding the product are inviting to solution providers that have been struggling in a down economy.

"It's better than nothing," said Tony Safoian, president and CEO of SADA Systems, a North Hollywood, Calif.-based solution provider that took part in the Google Apps pilot program. "Twenty percent on any product is not that bad. It's a lot higher than what we make on Microsoft licensing, and I like the recurring revenue nature of it."

Google's lack of channel experience is a concern, but the company has been straightforward with VARs since acquiring Postini and gives them plenty of services opportunities, said Allen Falcon, CEO of Horizon Info Services, a Westborough, Mass.-based Postini reseller that has expanded its portfolio to include Google Apps. For example, Google sells Postini security services directly to end users but leaves the more lucrative work of customer support to its channel partners.

"People will pay us $30 per person, per year, and we give them the support and configuration assistance [as well as] quarterly performance reports and recommendations for configuration changes. We've had no trouble with price becoming an issue," Falcon said.

The fact that Google is focused on recruiting VARs with experience in services shows that the company does understand the channel, he added.

"As opposed to creating artificially high margins around the product itself, this forces us to differentiate ourselves," Falcon said.

--Additional reporting by Kevin McLaughlin

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