Google to launch business software

Jumping into a new market, Google Inc. is unveiling a product today to compete with Microsoft Corp. and IBM Corp. in the multibillion-dollar business of providing e-mail, calendar, and other tools on corporate computer desktops.

The Web-based product, called Google Apps Premier Edition, also will include word processing and document sharing, instant messaging, and Internet voice capability. Google will offer it to large companies for $50 per employee, host the applications on its own servers, and provide a service guarantee for its customers.

If successful, Google's business software suite could expand the revenue base of the world's dominant Internet search company beyond search-related advertising, reshape the way businesses deploy their productivity and collaboration software, and pose a direct threat to Microsoft's largest profit center.

"Google is the most important challenger to Microsoft on the desktop in the last 10 years," said Jim Murphy , research director for AMR Research in Boston, which tracks how industrial companies use technology. "They're trying to eat away at Microsoft's core business."

Consumers have long been able to download software, like the e-mail program Gmail, from Google's website for free. And last summer, the Mountain View, Calif., company introduced a free test version of a bundled suite of software applications for small and mid size businesses, called Google Apps for Your Domain. That, like its consumer software, was supported by advertising.

The product being rolled out today is targeting large firms and other enterprises with hundreds or thousands of employees, and it works on a very different business model. The concept was outlined by Dave Girouard , Google vice president and general manager for enterprise, in an interview with The Boston Globe last month.

While existing business software suites, such as Microsoft's Outlook and Office and IBM's Lotus Notes, sell licenses that allow customers to run the programs on their own computers, Google's software applications -- which, like its search engine, feature simple, uncluttered interfaces -- are downloaded from the Internet. Its e-mail program offers 10 gigabytes of storage, compared to 2 gigabytes with the free e-mail it offers to consumers and small businesses.

And large customers would, in effect, turn over management of their applications to Google, which would host them on its own global network of servers. This model of software as a service, rather than a product, was pioneered by Salesforce.com and has gained momentum over the past three years. Through so-called "service-level agreements," Google would guarantee customers that their business software applications would be up and running around the clock.

"We feel this should not be difficult to implement," said Rajen Sheth , product manager for Google Apps.

Ted MacLean , the New England general manager for Microsoft in Waltham, said his company wasn't taking the Google rivalry lightly. But while noting that Microsoft also offers Web-based programs, like Windows Live and Office Live, primarily for consumers and small businesses, he said the company has built up a base of hundreds of millions of customers for its more robust business desktop programs. The company recently introduced upgraded versions of both.

"Competition makes all of us better," MacLean said. "We don't take even one of our customers for granted. But when we think about our enterprise customers, we see their requirements as an order of magnitude more stringent than the requirements of consumers."

Microsoft has a range of prices for its business software, depending on the size of the customer and the nature of the contract, and some customers buy only Office or only Outlook while others buy both. While the company won't discuss its pricing, analysts estimate the typical large enterprise customer pays between $150 and $200 per employee for Office and Outlook together. Microsoft's combined package includes some features, like PowerPoint presentation software, not offered by Google and others, like Excel spreadsheet software, that are more sophisticated than the Google spreadsheet alternative.

Some companies may stick with Microsoft Office for certain groups of employees, like financial analysts using Excel, but try the Google applications for other employees, suggested Rebecca Wettemann , vice president of Nucleus Research in Wellesley.

"What we see in the Google Apps is a real focus on making them easy to use and intuitive," she said. "And that's something that Microsoft has been unable to do in all of its years with Office."

At the same time, Wettemann said, most companies are unlikely to abandon the Microsoft business suites until Google can address its product's shortcomings . They include the lack of an alternative to PowerPoint (a program Google itself uses internally) and the inability of its Web-based applications to work on airplanes or other places without Internet access. "Right now Google's going to give companies a better ability to negotiate with Microsoft," she said.

AMR's Murphy said Google could emerge as a formidable competitor to Microsoft and IBM within three to five years, in part by offering low-cost programs that let retailers and manufacturers provide e-mail to employees who currently don't have it. In the short term, however, he said companies "are going to find that, in terms of features, the Google Apps pale in comparison to what Microsoft can do."

Robert Weisman can be reached at weisman@globe.com.