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. It’s growing fast – in a recent post where Google announced the opening of a reseller program, the company said that more than 1 million businesses and 10 million users use Google Apps today, and 3,000 new businesses sign up daily. The largest business user, Genentech, has 20,000 employees on Google Apps.
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.
Update: Dave Girouard, Google’s President of Enterprise, emails to say that before the recent change to limit free accounts to 50 users, admins could request additional users without upgrading. The recent limitation was set to encourage reseller enthusiasm. He also says Google has no plans to further decrease the limit:
I run the enterprise/apps division at Google – we met a couple of years ago at the Apps launch. I read your story this AM on Techcrunch. Just a bit of clarification and explanation for our change. Until just now, we actually had no caps whatsoever on # of users on Apps Standard (ie free version). The 100 and 200 user “limits” you saw were actually just the defaults that showed up there – admins could request any additional number they wanted.
As to the question of our motivation, the reality is a little more subtle. If it weren’t for the reseller program, I can say for sure that we wouldn’t have put the cap on the free edition. The reality pre-reseller is that the vast majority of larger businesses opt for the paid version for all the reasons you can guess (support, api access, ldap synch, etc). So the mere imposition of the cap has a trivial direct impact on our revs. However, with the new channel program designed to attract a big ecosystem of resellers, it’s hard to convince them that this isn’t really an issue – eg that they shouldn’t worry about competing with a free product. Indirectly, we think the cap will help us grow revenues more quickly, because it makes it easier to attract high-quality partners.
We started 2 years ago with the belief that we needed a huge installled base first . . . and that subscription monetization would happen mostly in companies of larger than 25-50 employees. And also that we had a very viable ad-supported product for very small businesses, who tend to think more like consumers (free is good). We designed our approach to get a massive user base, and then to get increased monetization as more bigger companies adopt. This isn’t the same as saying that we want to get companies started on “free” and get them to pay later – that’s a relatively small effect in my view. Both user growth and revenue is in fact accelerating. Maturity of the product accounts for that, though we still have a ways to go.
There’s no reason to believe that the cap will continue to “move down” – we have no plans whatsoever to do that.
It needs more beefing before I’d pay. Google gears should allow offline creation of docs.
Does anyone else get the feeling that they have seen this all before?
Except the first time the company was called Yahoo?
And offline email access- that would be killer
next up aol
-Jim
http://www.movi...nlineforum.com/
(just getting started so check it out)
yea…google is getting tough..
let us hope some other service provider takes place of google.
http://www.hsiplabs.com
It does need some beefing up but I really like some of their unique concepts. The integration between the Google Doc’s Spreadsheets and the online forms is excellent. Nicely geared for online conversion tracking for the AdWords program. Watch this space…
there are not many options. gmail has a familiar interface and google is en cashing that.
Zoho sucks big time and yahoo sucks less, so that gives some more time for google
Zoho’s office suite is superior in every way to Google’s “office”. It has more programs, with more features, which are more stable than Google’s.
Zoho even integrates with Office and uses Google Gears for offline editing.
In short, it does everything Google should be doing, but isn’t.
Plus, Yahoo doesn’t offer an online office program. What are you smoking?
you prodbably did not check Zoho and you are talking on what you hear, Zoho is way more better then google
“way more better”
sigh.
Zoho trumps GDOcs any day of the week. I’ve been using and enjoying GDocs for collaboration features, however once I switched to Zoho just to try it out, I didn’t want to get back. It is superior in every way.
Plus you can see that those guys at Zoho really try hard. They implemented import for GNotebook in days after it was announced that it will be closed. There are new features all the time.
For sure, Zoho really tries hard. Especially when you have hundreds of cheap labour in India.
I can envision how Zoho CEO works:
“I want GNoteBook importer done by the end of this weekend, don’t go home if it’s not done”.
My company Zapatec offers 6zap “a full-featured, open source communications platform that integrates e-mail, calendar and contacts.”
It’s available online at http://www.6zap.com, as a downloadable package or in the cloud as a pre-configured Amazon EC2 AMI. Using the AMI you can have your own private machine and host as many users as it can handle (thousands).
While we have Email Calendar and Contacts tightly integrated, we don’t have a Google docs equivalent.
Thanks for the spam. Since you “don’t have a Google docs equivalent” your comment is worthless and out of place.
While we don’t have the in place editing capabilities of Google docs. We have Email Calendar, Contacts and File management modules. Mail, calendar and contacts are used an order of magnitude more than docs.
http://www.quan...m/traffic/sites.
We also have features that Google doesn’t like email aliases (Zcounts).
I had to read this twice. Care to elaborate on what you don’t like about Zoho?
Personally I’ve found using Zoho to be a great experience, and superior to Google Apps in nearly every category.
i believe the a/c creation blocking is a good move. i my self have 500 a/c for few of my domains but i dont use it and another reason. i had entered it thinking i may need.
if they dont block they will not be able to earn using paid package.
We tried Apps but when we had trouble getting the domain/MX records pointed correctly there was no support to help us out.
If you’re going to charge money for a premium service you need someone at the end of the phone to support it!
The help pages are pretty clear about setting it up and provide a number of variations of the instructions depending on what registrar you used when registering your domain.
Premium version also includes support.
I use Apps on 6 domains and have set it up for a number of companies. Three of those domains have premium accounts and I think that it is worth the $50/user/year. I have been using Apps since they were released to the public and I haven’t looked back.
The documentation is extremely straightforward on the dns changes. Just follow it to a T and you can’t get it wrong.
And what happens when you follow them perfectly and have over 10 years experience in DNS but it still doesn’t work and they won’t help you?
A better question is – if everyone and their mom (including a non-full fledged-techie like myself) can figure it out and you (with your 10 yrs experience cannot), are you in the right field?
You own a webdev company and you don’t know how to change a domain’s MX settings?
Remind me to never hire you for anything ever.
I (and my colleagues) are perfectly aware of how to set up DNS and MX records thank you very much Ryan *rolleseyes*. Remind me to never ask you for advice, ever.
We even had Rackspace support looking for problems. The problem was clearly with Google Apps, not our settings, but we couldn’t get anybody to help us out.
We certainly won’t be recommending it to any of our customers due to the lack of support.
The point was that GOOGLE IS CHARGING FOR THIS CRAP.
They need to offer support, b/c if they’re not, then what the hell are you paying for?
There are better, free/cheaper alternatives out there.
Joe,
The point is you are too stupid to follow simple instructions.
and the point that you are missing is that when you pay for the account, they DO offer support.
Bonehead joe Wakeup! Read before you post.
http://www.goog...s/editions.html
You are retards. A 6 year old can setup it by the description.
At last Google has woken up to the real business world and realised that you can not offer business users ‘free lunches’ when using key Google services.
But as you mentioned briefly, both Zoho and Zimbra offer even cheaper versions of the same services. Plus along with the forthcoming realeases of Microsoft’s Office Live Services, maybe Google should look at other areas in which to package their complete Google Apps Services.
If Google Search and Ads is packaged together for the benefit of Business Users, then what type of other Google Services can be packaged together for Business needs within Google Apps.
Maybe Google Earth & Google Maps?
Over the next Three Years Google needs to show everyone that Google Apps is a potential huge revenue earner for the Company and not a Web 2.0 Sideshow.
I vote for Web 2.0 sideshow.
Google Apps is great for sharing docs however there are lots of open source Desktop Apps that also work out well. On the other hand I hope that Google Analytics won’t be “squeezed” like Google Apps.
@Tobias I think that’s a valid point – personally I think it’s only a matter of time until Google start charging for the Analytics product – it’s right up there amongst the heavy hitters like Omniture and WebTrends, but it’s free… for how long?
Of course there’s an argument that Google will continue to use a site’s data for their own reasons (benchmarking, trends, analysis, search algos, etc) but I still envision a paid Google Analytics product that has all the bells and whistles, versus a basic free version that is still limited by the number of visits or similar.
Let the record show that I very much hope I’m wrong!
With layoffs and slow economy, businesses are more likely to keep shrinking instead of growing
50 is still reasonable. As long as they don’t lower it much more, nobody can really complain. I think they were being over-generous before and even Google can’t afford to be over-generous these days.
From what I can see, Google limits account creation to the number you asked for when you signed up for Google Apps. I have created many Google App accounts for many domains, and the limit always is set at the amount that I specified when I signed up. I have been setting the amount at 500 for quite some time, and all of those domains still have the 500 user limit, regardless of how many users I have created.
I think that may be true. As a small company we opened an account and the limit was 10. Now it has been lifted to 25, however, not to the 50 user limit.
That seems to be the case for me as well – I just created an account a couple days ago and as always requested 500 users at signup – and that’s exactly what I have available to set up now
Why should a business take the risk to outsource all their data (to a single company)?
We have free open source products that give us privacy and much better data sercurity. Just use them.
Some companies don’t have the technological knowledge (or can’t afford it)
Google Apps is a very practical solution for small companies that don’t want to spend money on commercial solutions, or the knowledge, time and patience it takes to download OpenOffice ISO, burn it, and install it.
You just login to your email, and you have it ready, and collaboration ready, it’s really convenient, and since it’s google, you trust that you won’t loose your data.
People with a more professional background know that they probably shouldn’t do this.
I guess it also depends on the importance of the information you’re putting on google’s servers.
this was ought to happen, sooner or later. finally it seems freemium is dead.
Freemium isn’t dead, they’re just getting more aggressive pushing people into the premium instead of the free. As far as I’m concerned, if you have more than 50 people using your domain, paying for Google’s services so that your employees don’t have to look at ads all day seems fair. If the costs are competitive with others providing similar services, you’ll pay them, and you’ll get what you pay for.
I don’t mind the subtle push to get people to pay for premium services. Companies need to make money. However, if Gmail comes out of beta and Google decides to move the better features to a premium tier, a lot of people will be pretty upset.
The problem with all Google products is the complete lack of support at any level. There’s nobody to email, no phone number… nothing.
They are too busy organizing the world’s information and can not be bothered with support issues.
LOL !
I wish idiots would not comment on services they have not even looked at. They do offer phone support to paid users. Why should the offer paid support to free users?
In my opinion they should lower the free package to 25 instead of 50 and should charge less per user for the paid users.
http://www.goog...s/editions.html
Google has to have a careful navigate the what-the market-will-bear waters. Luckily Google has the Analytics to course correct in a timely fashion. If done right Google wins in marathon versus winning a sprint.
If you’re hosting more than 50 email accounts at Google, I don’t think it’s unreasonable to have to pay them for it. Programmers are, after all, human beings who deserve a reasonable standard of living. Servers aren’t free either.
Free is starting to fail, even for the big businesses who it used to work for.
Though if you’re paying $50/year for something, some amount of support can be expected…
Free is dead. At least in the sense that we have known it. The cost of running datacenters and paying the devs is too high to ever give away for free to the majority of users.
I think that we will see a three tiered internet:
very simple free version
paid app for normal use
expensive upper end option
This is the internet, so we still will always have a free option, it is the -imium of Freemium that is going to change in the next 6 months.
Paid support is expected and given. Have you looked at the comparison page?
http://www.goog...s/editions.html
nice blog!
Business application ISPs worldwide will be breathing a sigh of relief. This sets a precendent for paying for business apps even if delivered online as SaaS.
I share the view that ads while trying to get business done using apps that just happen to be delivered online are a nuisance. People will pay if the apps are important — Salesforce.com has proven that. If anything, I expect Google Apps to appear more credible because they DO have a fee paying model.
Ian Hendry
CEO, WeCanDo.BIZ
http://www.wecando.biz
In this economy, it seems as though everyone is tightening their belts, even Google. Still, $50 a year isn’t that bad a price.
I love Google Apps. It has been great for http://tipjoy.com
I might just go out and pay for it, despite lacking the users to demand it. We’ve certainly already gotten a subscription’s worth of value.
This move is good I think. The google freemium seems to forget the -mium sometimes, and stick with free too long.
Does anyone else find that truly annoying?
http://www.priv...cy-tools.net.tc
this is no surprise…it’s always the way to do it assuming you can subsidize losses, until you have users hooked enough that they will pay a nominal fee to continue using…
google’s new cfo did promise to monetize so we saw this coming…
still thinking about the touch screen notebook you guys have…
“Bailout News and Laughs. We find it, read it, sort and then give it back to you ALL DAY EVERY DAY. We are keeping ALL the records on the greatest Taxpayer heist in history! Come Check Us Out! WE run NO ADS on the site. And tell your friends and anyone else who cares about their future and that of their children. Please help us spread the word!”
If a business can’t afford $50/year per user for Google Apps, then they sure as hell can’t afford Office and/or Exchange.
Both Google and Microsoft are moving towards the center.
Microsoft is moving from a bloated, overpriced, office suite that costs a fortune to purchase and support, towards a slimmed down online version with a much slimmer margin. They most likely will try and make this dependent on running IE, which of course is a mistake.
Google is moving from a free, slim, and not terribly feature rich, albeit very integrated product, towards a more (we hope) feature rich, product reasonably priced for business users. I don’t think they will make it dependent on running their Chrome Browser however.
Google is light-years ahead of MS in offering software as a service. They have an infrastructure that will be very costly for Microsoft to duplicate especially considering the efficiency of the underlying technology used by Google. It will be very costly for Microsoft to compete with them on the scale that will be needed for a service such as this to be profitable.
Microsoft’s will have to be a premium service. They will have the advantage of the corporate world’s crack like addiction to Office, Exchange, and Outlook even though 99% of the users only use 5% of the features.
I think there will be room enough for both players in the marketplace, but both have the same problem which is: They relieve a company of it’s control over it’s data and communications making them much more vulnerable to arbitrary court orders, and/or government oversight and regulation.
We have seen enough cases of websites taken down due to court action, imagine if your entire business could be taken out even for a short period of time in the same way? The legal ramifications of utilizing these services I do not believe have been thoroughly vetted.
-Chris
Office can, and usually is, used for 5-7 years before being replaced. I know businesses that still use Office 2000.
MS Office comes with extensive support, can be be customized and extended, and is the industry standard. It does not require an internet connection.
Google does not come with support, can’t be extended, and is not standardized. It also requires a working internet connection.
Office licenses, at the enterprise levels, per user, run at $100/less for a one-time license.
100/8 = $12.5/year for using MS office 2000.
100/2 = $50/year for using MS office 2007.
Unless you’re buying MS Office every single year, it’s the same cost or cheaper than paying for the unsupported, feature-poor, limited-access Google Office.
Google can’t even compete with MS Office on costs BEFORE MS has added in the online stuff expected for this year or next.
We get it, you don’t like Google, but stop the misinformation please. You neglect to mention that deploying Office requires internal support, and that doesn’t come cheap. Not to mention indirect costs like all the patching & virus cleanup required when running horribly insecure software like the junk MS puts out.
Offering collaboration and messaging apps to professionnal users, requires offering a serious and professional support. SME’s need help in migrating their data, in understanding the possibilities of the application, in helping them with the configuration of their mobile mail, synchronisation issues,….
To do so for even $50 a year is a tough one. Let alone for free. @ http://www.contactoffice.com our paying subscriptions range between $5 and $50 a month BUT include professional support.
Google is clearly adopting the “drug dealer business model”: first shoots for free, and when you’re addicted you have to pay!
In tough times, there is no more free lunch!
Zoho costs more than Google Apps and Zimbra isn’t a great alternative. Neither have straight-up pricing on their product(s). M$ is the only real competition here at this moment in time.
$50 is cheap people. In fact, unbelievably cheap. If you have 50 employees, that’s only $2500 a year. If you have 50 employees, you easily have annual operating expenses in the millions, you’re a real business, and you’re not going to blink twice at $2500 for something as important as email.
The alternative cost of buying your own mail server, paying a sysad to setup and maintain it, run a calendaring platform, etc, etc will vastly outweigh the cost of Google Apps.
I’ve had 2 domains since the beginning, and they are both limited to just 25 users. That’s more than I will ever need, but I thought 25 was always the limit.
Once Gmail adds folders, then we will consider the switch.
Pet peeve: I don’t understand why some people have such a hard time with labels in Gmail. Labels ARE folders, just with more features and benefits.
This has been raked over so many times. Labels are NOT folders, at least not hierarchical folders. And no, Folders4Gmail doesn’t do the trick. You can’t search within a folder, including subfolders. To get similar functionality, you’d have to create a label for each level in the hierarchy and add individual labels. (e.g., “/work/clients/google/businessplan/” would require four separate labels). You can’t drag and drop to folders. If you have hundreds of folders (like any professional will), it is immensely inefficient to put an email into a “folder” in Gmail.
Yes, on the rare occasion where an email really does belong in two places, labels are nice in that you don’t copy the message into two folders. However, for me, 99% of the time, the lack of folders makes it MUCH more painful.
Pet peeve… unorganized people who use gmail for personal communications, have 10 or 20 labels, can’t understand the value of hierarchical organization, and berate people for using email for something other than dicking around.
That is odd, I just set up a client with Google Apps for their firm last night and have the full 200 accounts available.
They’re trying to squeeze out $$ wherever they can find some……as well they should.
Has Google lost its way?
When they went public they told us they wouldn’t manage the business to suit Wall St, but isn’t it obvious that throughout Q4 they aggressivley expanded the placement of ads on google properties so they could hit Wall St. targets in yesterday’s earnings announcement?
Then there is this announcement which has Google announcing that the service is Free to announcing that its actually Freemium, now they are putting strict limits on the number of free accounts. Of course its only $50…for now.
When google apps was launched for the first time, they had a limit of 25 users. Not 100 or 200.
I think it makes sense that Google is decreasing the number of users on the free version. However, they’re now getting to the rubber meets the road part: when people pay for a service they expect to get solid support, and Google still hasn’t figured that one out.
Google Apps Premier Edition (GAPE) has been out for almost two years now and it still hasn’t made significant inroads into large corporations. (While Genentech runs GAPE, the head of Genentech also sits on Google’s Board.) If Google Apps were a startup, the VCs would have pulled their money six months ago.
This is probably the best news Microsoft has heard in the last 12 months. In a world where all cloud-based apps are advertising-supported, Google is the indomitable king. But in a world where people actually pay for software– even when it is cloud-based– Microsoft still has a fighting chance.
So from what I understand, the average user has nothing to worry about, right? It’s mainly businesses they’re concerned about…?
Nothing is free forever. Even Google eventually needs to justify the R&D cost with real revenue. Competitors such as Zoho will have an impossible time scaling distribution to reach the masses, especially with Microsoft and Google battling it out.
I run the free flavour of Google Apps for several domains. If I needed more users than the initial allotment, I request them and they’re immediately granted. This article seems to be grasping for a headline that doesn’t exist.
Of *course* Google wants more people to use the paid version. I guarantee you, though, that they make money on the ads displayed on the free version. I feel like the paid version is a niche product for businesses who need access to tools (Google’s API, SSO, migration middleware, etc). Small businesses and mom & pop shops just want cheap email/calendar/collaboration, and if they have to put up with ads for that, so be it.
It’s time for Google to get more transparent about how many enterprises are really using Google Apps.
why?
we get a ton of value from gApps – email search alone is so fast and easy it makes it superior to outlook. as a small startup I think we are safe under the micro plan pricing of Free for a while, if we add 20-50 users or over the next year, sweet, no prob shelling out a little cash for the service.
I hope someone in Google is hearing this:
(i)
GAFYD should have a direct link to other services, like reader, youtube, maps, picasa, etc. Today, it doesn’t. Two completely different sign-ins… a small nuisance, but an EVERYDAY nuisance. And sometimes that becomes larger: for example, to email an item from google reader, you can’t access your gmail contacts directly. So you have to log-in to Google apps to find the particular address. That is annoying, and an everyday annoyance is something that simply moves people away.
(ii)
G Apps should, in my opinion, be more granular. In my organization, some users are fine with 1GB of space, most are fine with only a forward to their own email. Why charge $50 for these? I would gladly pay $200 per user that needs it, but since its either all-users or none, nobody gets it.
If Google would implement these two changes, my organization is moving to premier (they could even keep the ads for all users; some ads are really useful).
Otherwise, we stay on the free side.
(iii)
A third and final complaint, about regular gmail: MORE regular gmail addresses! There are no more good account names in gmail. A friend of mine’s username is Lisa.Pizza@gmail.com (not really Lisa of course) because there are no more usernames available, so people have to go to MArrington76 or other ridiculous usernames. I’d pay money to have a good username.
Point (ii) is the killer for me.
I have 13 users who actually need space, support, and sync.
I have another ~25 users for whom 10 MB and a free Hotmail account without even IMAP access would be perfectly fine, mostly for internal policy memos, etc. They wouldn’t know an Exchange server and OTA sync if I hit them in the face with it.
Right now, the only solution would be to have the two on completely separate domains–I don’t like that. So, like Alexandre, everybody stays free, because we can’t afford $2,000 per year. ($650 would be pushing it.)
Also, group email inboxes (e.g. sales@domain.com) are a nice thing–it can be done now using Outlook/Thunderbird but not via the webmail, which is kind of annoying. And you have to be careful about how many concurrent logins you have–too many and Google cuts you off.
And I haven’t heard the greatest things about even the Premier Edition’s phone support.
People used it because it was free. I don’t know if it will become as popular if people are required to pay.
I’m always amazed at the people who complain about paying money for goods and services, particularly when it comes to Google.
If I can’t reach Google for any troubleshooting or down time, I don’t expect to be paying them for any service. Besides – Zoho does everything I need my online apps to do.
Ironically, 50 users is roughly the cutoff point where companies get serious about IT and will not accept shoddy, basic consumer services like Google Apps.
Instead of Gmail, you can get Unison for free – a real client/server system. And instead of Mickey Mouse tools like GAPE spreadsheet or docs, you can get MS Office or (for free) Open Office – much more powerful.
All my accounts still show more than 50 email accounts available. Hopefully this restriction is only for new sign ups. I wonder what happens if you already created more than 50.
Anyway 50 seems like a more than reasonable number. If it went down to 10 I’d be bothered. But, if you have more than 25 employees then you should be able to afford the paid version.
I’m not sure why people are saying there is no support. The free version has no on call support but the paid version has email and phone support. I’ve used both and the support is ok.
I do think that $50/user/year is too high for small businesses though. Most small businesses don’t need the premium features of the paid version. All they really want is email and maybe the calendar. You can get those as part of many hosting plans for much less than $50/user/year.
I use Google Apps only because at the time I signed up, it was the best of the free options for my needs (mostly email). If they began charging, I’d jump ship in a skinny minute. I’m all for them making money, but Gmail is only JUST tolerable (SLOW IMAP, no folders, INSANE and nonconfigurable attachment rejection policy–WTF can’t you send source code in a zipped file???). Their apps are sad and stagnant. Honestly, even without a change in policy, I’ll likely change in the next couple of years unless they do something major to make them more compelling…
Zoho is the way to go. They are much more responsive to user needs and have much better feature set than GApps. Only if people take thier head out of google fog and look at alternatives, they will realize how far other tools have come…
I’m glad I grabbed the Education Edition before they cut it.
Google did not cut the Education Edition of Apps.
I’ve registered for Google Apps and — the first time I did — I had a limit of 100 accounts, but the other times I’ve registered is through Dream Host. If you do so, you get 200 accounts!
$50/user/year is totally/totally/totally worth it.