Google Apps Enters Enterprise Market

Google Apps is taking the plunge and selling bundled services. They’ve priced it at $50 per user per year, relatively cheap. For that price you get Gmail, Google Talk, Google Calendar, Docs & Spreadsheets, Page Creator and Start Page. You also get a 99.9 percent uptime guarantee for your 10gb (per account) email. I personally think this is a great offering. The ZDNet SAAS blog makes some good points on the long-term implications of Google’s move into the market (emphasis not mine):

Well, I don’t see this eating into Microsoft’s core Office user base, not until the functionality improves closer to parity, which will take a year or two yet. Several people have commented that Microsoft’s customers will be able to use Google Apps as a negotiating ploy to get better prices out of Microsoft… Customers will now think twice whether they really need to stump up the full cost of Office when they can make do with Google Apps or some other alternative. A lot of the early adoptions will be tactical, short-term implementations that will gradually and imperceptibly turn into long-term commitments. Ultimately, if Google Apps can insinuate itself into replacing Microsoft Office as the no-brainer, don’t-have-to-think-about-it option, then that is when Microsoft will really have something to worry about.

This hits the nail on the head. Companies are going to give Google Apps a try and, if they like what they see, they’ll think twice before renewing their contract with Microsoft. VentureBeat is correct on the timing of the release. Google is stealing press from Vista’s launch and giving businesses an alternative to spending boatloads of money to upgrade. Google also brings credibility to the SAAS movement. While the offering doesn’t compete directly with Microsoft Office’s dominance, it is a first step. Could enterprise apps be Google’s second act?

Two final points: First, this open API is going to generate some interesting innovation. Second, Google made a smart decision signing on some big-name customers such as Salesforce.com and Procter & Gamble (the videos are great) and featuring them in the launch.