Google Puts The Squeeze On Free Apps
Google says the vast majority of the 1 million businesses that use Google Apps opt for the free advertising supported version. To make the free option less attractive they’ve been quietly lowering the number of user accounts that can be associated with a free account. Now as businesses grow, they’ll be forced to move to the paid version much more quickly than before.
Google Apps is a suite of online applications like gmail, Google calendar, Google Docs, etc. that are packaged and tailored for business use. The company report that more than 1 million businesses and 10 million users use Google Apps today, and 3,000 new businesses sign up daily.
When Google Apps first launched in August 2006 it was free and described as “a service available at no cost to organizations of all shapes and sizes.”
Free for everyone lasted until February 2007, when Google announced a premier edition of the service with more storage and an uptime guarantee. The cost was (and is) $50 per user per year.
When Google Apps first launched up to 200 user accounts could be created for each business under the free version. But that limit was quietly reduced to just 100 user accounts. And then when the reseller program was announced earlier this month, the limit was cut in half again, to just 50 accounts.
Google also changed the sign up page for Google Apps. The page used to show (screenshot) a comparison between the free and premium versions. Now it only shows the premium version and offers a free trial. To see the comparison chart you have to click the link “compare to standard edition” to see the free and premium versions compared.
The goal is clear – to get more premium accounts that pay $50/user/year. Income growth has slowed considerably at Google and the company is looking for more ways to ramp revenue, particularly newer revenue streams, and control costs. And it’s more than fine that Google experiments with pricing on these products. But they have to remember that they’re not just competing with Microsoft and its expensive exchange server product; they also have cheaper competitors like Zoho and Yahoo’s Zimbra to deal with as well. They may not have as much pricing flexibility as they think.
Tags: applications, google
