Google recently announced a major change to Google apps, its suite of office software. While it previously offered the service free to
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individuals and businesses with less than ten employees, it’s now planning on charging all businesses who want to use the software. It may sound like an academic change, but it signals an important shift. It shows that Google is getting serious about enterprise software, and it’s moving into Microsoft’s strongest business.
In a blog post, Clay Bavor, director of Product management, outlines the change to the business side of Google Apps (for individuals and educators, it’s still free):
Instead of two versions, there will be one. Companies of all sizes will sign up for our premium version, Google Apps for Business, which includes 24/7 phone support for any issue, a 25GB inbox, and a 99.9% uptime guarantee with no scheduled downtime. Pricing is still $50 per user, per year.
Historically, Google has looked at absolutely everything it does besides search as a loss leader. Its search lead has been so unassailable, and so profitable, that it’s been willing to give away a whole lot of other services in order to keep that goose laying golden eggs.
This is a major move toward making a profit off of Apps. The Wall Street Journal points out that Google already makes about $1 bn from Apps a year, even if the majority of its customers use it for free. With enough businesses reliant on Apps for basic services, coughing up $50 per user per year won’t be such an oppressive expense.
This should be troubling for Microsoft, which is in a precarious position with its new operating system and lackluster tablet sales. Businesses are the backbone of Microsoft’s software empire – without them, it would be in serious trouble.
Enterprise consumers aren’t going to immediately start abandoning Microsoft Office en masse. Certainly not while it still has Excel. But with the sort of mean software development teams Google is famous for, Microsoft needs to get on the defensive in order to maintain its lead with enterprise customers.
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