Google to Loosen up Apps Contract Terms

Google will allow companies to sign up users for its paid Apps for Business hosted collaboration and communication suite on a month-to-month basis, without having to commit them to an annual contract.

Called the Flexible Plan, this new option will become available globally in the coming weeks and will let companies pay US$5 per user per month, providing more flexibility to add and drop employees from month to month.

Google will continue to offer its existing billing model of $50 per user per year, which requires a one-year contract.

The Flexible Plan will be available to any company that signs up for Apps for Business online.

Google envisions the Flexible Plan as being most attractive to small businesses, because their staff and cash flow can change dramatically in a short period of time, Google said in a blog post on Tuesday.

In addition, Google will now charge Apps for Business customers at the end of each month, as opposed to up front, and will add the option of direct debit payments in the U.S., UK, Austria, France, Germany, Italy, the Netherlands and Spain.

"The new flexible billing options will be welcome in the marketplace. The less money customers have to put up front the better, and the more granular the billing options the better," said Gartner analyst Matt Cain via e-mail.

Apps for Business resellers will be able to offer these new billing options in the coming months.

Simultaneously, Google next month will also shrink the maximum number of users an organization can have in the free, standard Google Apps edition from 50 to 10. That change will affect companies that sign up on or after May 10. Companies that already use the free Google Apps edition will be able to continue using it with up to 50 users.

This cap on the number of users doesn't apply to the Google Apps for Education edition, designed for schools and universities, which is free, nor to the special pricing options Google has for nonprofit organizations.

The Flexible Plan could be prompted by the upcoming launch this year of Google Apps rival Office 365 from Microsoft. Office 365, the upgrade to Microsoft's cloud-hosted collaboration suite Business Productivity Online Suite (BPOS), will have several pricing options, starting with a bare-bones, e-mail-only version that will cost $2 per user per month. At the high end, Office 365 will have a version featuring Office 2010 Professional Plus on a subscription basis for $24 per user per month, along with other suite components like SharePoint Online, Exchange Online and Lync Online.

"Taking away a free entitlement, by mandating that new customers with over 10 users have to buy the service, will not be popular and will likely help Microsoft's own small business push with the forthcoming Office 365 service," Cain said. "It is understandable, however, that Google would want to monetize this important market demographic."

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