Google to sell software suite to corporations

updated 12:47 a.m. ET Feb. 22, 2007

SAN FRANCISCO - Google Inc. will begin selling corporate America an online suite of software that includes e-mail, word processing, spreadsheets and calendar management, escalating the Internet search leader’s invasion of technological turf traditionally dominated by Microsoft and IBM.

The expansion announced late Wednesday threatens to bog down Microsoft Corp.’s efforts to persuade corporate customers to buy the latest version of its market-leading Office suite, which was developed along with Microsoft’s new Vista operating system. (MSNBC.com is a Microsoft-NBC Universal joint venture.)

Google’s software bundle, to be sold for a $50 annual fee per user, also poses a challenge to International Business Machines Corp. and its Lotus suite.

While Google’s latest foray into the corporate software market seems unlikely to topple the status quo right away, AMR Research analyst Jim Murphy said it’s only a matter of time before the Mountain View-based company becomes a major player.

“This is just the beginning,” Murphy said. “The real impact of what Google is trying to do probably won’t be evident for another five years.”

Google has been offering a free version of its online software suite called Google Apps for the past six months. More than 100,000 small businesses and hundreds of universities nationwide are using the free service, Google said.

The fee-based version, Google Apps Premier Edition, includes five times more e-mail storage — 10 gigabytes per e-mail box — as well as a guarantee that all services will be available 99.9 percent of the time and around-the-clock technical support. Google also is adding mobile access to e-mail accounts through the BlackBerry devices that tether workers to their offices.

By dangling its business software package at such a low price, Google is giving companies a greater incentive to delay buying Microsoft’s Office 2007 as they assess the pros and cons of a less expensive alternative, said Nucleus Research analyst Rebecca Wettemann.

“The timing (of this offer) is just brutal for Microsoft. It’s definitely a shot across their bow,” Wettemann said.

‘Not in this to get Microsoft’
As they usually do, Google executives downplayed the company’s intensifying rivalry with the world’s largest software maker.

“We are not in this to get Microsoft,” said Dave Girouard, general manager of Google’s business software division. “We are in this to offer more compelling choices for consumers and businesses.”

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