Google to get aggressive with Apps suite

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SaaS model will challenge Microsoft, Google's enterprise head says

By Juan Carlos Perez | Miami | Monday, 11 August, 2008

Google plans to aggressively add new applications and capabilities to its web-hosted Apps software suite for businesses, and will likely leave the price unchanged as it builds out the service, a company official said recently.

The comments signal a move that will likely heat up the competitive fire between Google and Microsoft in the market for office productivity, communication and collaboration software.

Google, a recent entrant to this market, has opted to provide its suite via a software-as-a-service (SaaS) model.

Microsoft, a longtime player with its ubiquitous Office suite and Outlook/Exchange messaging and collaboration platform, is starting to react to this trend, although its software is still primarily designed to be installed on customers' own servers.

Currently, Google offers a free, ad-supported Apps version designed for individuals and very small businesses, and a fee-based version called Premier that is aimed at companies of all sizes and costs US$50 (NZ$68) per user per year. That is considered an aggressive price versus the cost of comparable Microsoft software.

Although the individual and business versions share the same core applications, such as Gmail, word processor, calendar, spreadsheet and presentation programs, Apps Premier has a variety of IT management tools as well as APIs (application programming interfaces) for integration with other software.

"Our intention is to really put more value at that price point and offer some amazing proposition to companies," said Dave Girouard, president of Google's Enterprise unit, at the recent Pacific Crest Technology Leadership Forum.

"We expect to hold the price point and add more and more value at that price point," he said. "We want to have commercial relationships with lots of companies, and it matters more that we have that than exactly how much dollar per user we're getting."

He went on to say: "We can certainly hold that price point. We can continue to put more capabilities there. The cost of an additional application to us is tiny, it's hardly material. There are certainly types of applications that we could add that would add cost and we would price appropriately, but I don't expect the price to climb. That wouldn't be my expectation," he added.

More than 500,000 businesses and universities have signed up for the free and fee-based versions of Google Apps, resulting in about 10 million active users of the suite, Girouard said.

Among its New Zealand customers in Auckland University, which rolled out Gmail to approximateluy 50,000 students. The university is a user of GAEE (Google Apps Education Edition), as is Waikato Univeristy, which was the first local tertiary institution to sign up for the offering.

Apps Premier customers don't generally object to the suite's subscription price, Girouard said, adding that their most common concerns before adopting it are about the security of hosting the software and data outside their premises, and about Google's future plans for the product.

He said Google isn't trying to provide all the features in, say, Microsoft Office, in which applications are generally considered to be richer in functionality. Instead, Google focuses on what it thinks Apps can do better, like simplifying collaboration and sharing in workgroups. As hosted software, Apps is designed with collaboration in mind.

"I'd like all the holes [in the feature set] to be filled, but I'll say generally we're not in the model of trying to replicate the products that work really well for what they do," he said.

For example, Google's spreadsheet application today isn't designed to win over financial analysts who spend a lot of time building very complicated models in Microsoft Excel.

"Excel is very good at that. [But] there's a million things you can use our spreadsheet product for that we think we're much better than Excel at," he said. "If you're looking for feature parity, you'll probably never see that."

Additional reporting by David Watson