The Apps suite includes calendars, word processing, presentation graphics, spreadsheets, online storage and branded e-mail, and the service will now be offered to new business customers for $50 per user per year, or $5 per user if on a monthly basis.

On the company's Official Google Enterprise Blog, Google Apps Director of Product Management Clay Bavor wrote Thursday that Google Apps started in 2006 with the idea of helping "businesses and schools work better together without the hassles of managing software and server ."

Businesses 'Outgrow' Basic Version

The next year, the company offered a premium edition for businesses at $50 per account per year, with such added business-oriented features as APIs, conference room schedules in Calendar, 10 GB of inbox storage, extended business hours phone support, and mobile access to e-mail on BlackBerry smartphones.

When the premium version was launched, a basic version was kept free for businesses and individuals. Bavor said that "time has shown" that businesses "quickly outgrow" the basic version and want additions like 24/7 customer support or larger inboxes, while consumers have to wait for new features until they were business-ready. In other words, Bavor said, the same package had trouble matching the needs of both markets.

Over the past 12 months, any business with more than 10 users paid $50/person/year, while before 2011, only those with more than 50 users did. Now businesses of all sizes are charged the $50/user/year or $5/user/month rate for Google Apps for Business, which includes 24/7 phone support, a 25 GB inbox and a guaranteed 99.9 percent uptime. Individuals can still have a free, personal account, and a Google Apps for Government is still available at $50/user/year.

The company said existing small-business users can continue without a charge, and Google Apps for Education is still available as a free service for schools. Google Apps has more than 40 million users and, according to The Wall Street Journal, the suite provides about $1 billion in annual revenue for the technology giant.

'Inevitable'

Laura DiDio, an analyst with Information Technology Intelligence Consulting, said Google's move to charge businesses at the lower end of total users "was inevitable," and added that the $50/user/year amount "wasn't a big pain point" for most companies.

However, she noted that, unless "they offer inducements, they'll lose half the companies right away." DiDio said she expects Google is waiting to see the reception, and, if the drop off rate is acceptable, companies will "probably see some additional rate increase" in the not-too-distant future.

Pund-IT analyst Charles King described the pricing plan as "a natural evolution of what you might call the 'first one is free' market-building strategy." He added that there's "been a great acceptance among smaller businesses" for Google Apps, whereas larger ones tend to have issues with compliance rules, business processes, security and functionality in the suite.

At this point, King said, the main question for SMBs is "what's the alternative," given that Microsoft 's Office 365 goes for $4 to $20 per user per month.
 

Recommended Reading: Search & Destroy: Why You Can't Trust Google Inc. Synopsis: This is the other side of the Google story. In Search & Destroy, Google expert Scott Cleland, shows that the world's most powerful company is not who it pretends to be. Google pretends to be a harmless lamb, but chose a full-size model of a Tyrannosaurus Rex as its mascot. Beware the T-Rex in sheep's clothing.

Craig:

Jonathan:

Sean:

Ricky:

Adrian: