Google Apps

Why SMBs aren't upgrading from free Google Apps

It's hard to argue with free. But when it comes to Apps, Google is certainly trying. It's just that some SMBs are not buying it.

Software vendors like 37Signals have used the one-month free trial to get companies to use their web-based collaboration software for nearly a decade. Heck, even my own company gives away a 20-hour audio training course to get people interested in taking our bigger products out for a test drive. Google tries to whet the appetites of their SMB customers with a 30-day trial of Google Apps, and the trial has a decent cash value - a few hundred bucks.

Lately though, I've come across dozens of small and medium businesses that simply choose not to pay for Google Apps. These are usually smaller shops, with under 20 employees. Financially, using the paid version of Google Apps does have a cost - typically, the software alone would cost a small firm (20 people) about $1000/year. Consider, though, that the very same company would have paid the same fee for three Microsoft Office licenses a few years ago.

What the ...

In a hilariously titled 2009 blog post, TechCrunch's Michael Arrington pointed out what many small companies found pretty jarring, one July morning: "What The Hell Happened To The Free Version of Google Apps?"

Remember, when Apps was launched in 2006, it was first aimed at being a free product, offered to organizations with under 250 users. Then, in 2007 that cap was reduced to 50 users. Then, in 2009, the free corporate version disappeared, for a few days. It was quickly replaced with the links to Standard Version (what end-users use), hours after Arrington's blog post. Google trimmed the 50-user limit back down to 10 users last April.

So why are SMBs (especially the small ones) so cagey about shelling out for Google Apps Business edition? Here's what we've heard"

  • The standard version is good enough, and works for up to 10 users.
  • Nobody needs to use Google Video or Google Groups For Business - one of the features of Google Apps For Business
  • They've been burned by AdWords, and are cagey about paying for another Google product
  • There's a perception that the free version of Google Apps has all of the same features
  • SLAs don't matter - I've never heard a Google Apps user complaining that their Apps were down, ever
  • They don't use Blackberries or Microsoft Outlook - this removes another need for Google Apps For Business
  • The look keeps changing - this really annoys SMBs, even though the changed look was designed to make corporate users happier

Our prediction is that Google will lower the 10-user limit to 5 users sometime this year. While this will annoy hundreds of thousands of small companies, it will make millions for Google, and likely not set these small companies back that much. It won't be great for goodwill, but the productivity gains that these companies see from the change will likely, eventually, make up for the hard feelings.

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About

Adam Metz is the VP of Business Development at Metz Consulting the social concept, a social customer management-consulting firm, based in Oakland, California. Metz has consulted with companies since 2006 on how to acquire, manage, monetize and retain...

10 comments
ricardoc
ricardoc

I'm (we are) using the paid version at work (three domains) and the free version at home (two domains). I have one simple way to describe it: Love it! That's not to say that there is no space for improvement, there is; but it has solved many of our problems. Google Apps solved a big issue we had with email sync on mobile devices since we never had Exchange. We were frustrated with Outlook (as a standalone product) and having to backup all those PST files. Google Drive has been very good for collaboration, because in most cases it eliminates the need of connecting to the VPN to get files. Calendar sync and sharing has been great; and we are experimenting a lot with Fusion Tables a wonderful tool that opens all kinds of possibilities. BTW, for those out there that are comparing costs between MS Office and GA, I will say that Google Apps are more than just an office package. If you're going to be fare in comparison, you need to add to the MS Office calculation, the cost of the email server; Outlook doing POP3 with whatever webmail can't never compare to Gmail in GA, and it is obvious that there will be no calendar sharing. GA also offers a few other perks that MS Office doesn't include: fast email search (Outlook search sucks, period), Google sites (helpful specially for small business), Forms (for surveys or data collection) that you can send to anyone you like and use it right on the browser, Google chat, Google voice and many others. Making a case between MS office against GA is not merely a case of comparing the cost of each; you need to compare features, specially those that are important to you or can solve problems. Thanks, Edited for grammatical errors.

kpdriscoll
kpdriscoll

Most of my clients use the PIM aspects of Google Apps, not the office stuff. Since many already had LAN servers, they were mainly after better groupware, not document storage. Perhaps if Google had another tier of product that allowed a certain smaller group of services for a lower price they'd draw more sales. The whole system is a fine product for virtual offices, but for a traditional single-office small business that had some infrastructure already, throwing the whole LAN to the cloud is not really enticing.

info
info

With the choices given for voting, nice way to assume that EVERYONE must be using Google Apps... Perhaps in a few years, when ALL computing tends to be Cloud-based (hopefully with the proper supporting infrastructure). Let's see, for 20 users I'll pay $1000/yr. Okay, I'll spend $200 a seat on Office Basic, or Business, or whatever the entry-level business product happens to be then, and with a $4000 cost (paid in installments, because I'm a poor SMB owner) I'll keep everyone using it for 5-7 years. Sooo, that would be $4000 vs ~$6000 total cost. (Despite what marketers and salespeople think, a LOT of businesspeople can still do basic math.) And that's following the licensing rules to the letter, which I'm sure a lot of them don't. I've surprised a few SMB owners when I told them the 7 (equivalent) 3-user Office products they bought weren't allowed to be used in a business environment. For the vast majority of users, Office 2000 was MORE than adequate. Heck, we'd still be using it if it wasn't for file compatibility issues with the newer versions.

aikisai
aikisai

I have been a fan of Google's products , as a home user from it's inception (managed to join Gmail in beta phase, used Google search much earlier). The Google apps are very helpful in collaborating on projects through shared authoring, as could storage, and even as a buffer to open unrecognized attachments in Gmail. It is a shame that they altered their use in such a manner. Anyhow..not so comfy but can always use the offline Libreoffice, and a share-space, like Google + to achieve similar effect/ or just revert to sharing through the mail.

Loggies
Loggies

I don't use it. The loss of privacy is unacceptable. Imagine PAYING a peeping Tom to watch over your shoulder ! Yes, I know privacy on the internet is a myth, but I am not going to pay somebody to violate it. There are opensource alternatives to Google for the budget constrained. This is more acceptable than the Google option. The bottom line is: Every privacy policy I've read to date says: "we'll do with YOUR information whatever we bloody well want and there is nothing you can do about it !! Furthermore, Google's latest usage policy change proved that "we'll do it retroactively too if it suits us". The bottom line is: No privacy policy is worth the screen space to display it. Consequently I'll never even consider the Google apps option.

mswift
mswift

I had a half dozen customers paying for Google Apps. They were all complaining waiting for the contract to be up. They are happy with Office 365. I think the meme is that Google provides free stuff in return for letting them slice and dice up our information for their profit. Enough people feel that is a good bargain for Google to make money. When Google asks for money, their barrier is much higher because then you are paying for the loss of privacy.

TNT
TNT

I myself do not work for a company that uses Google Apps at all. I use it personally for writing blogs and the occasional spreadsheet, but I have recommended it to many small non-profit companies. It is hard to convince them to pay for something that meets most of their needs for free, but those that see the value don't mind paying the $1000/year. As pointed out in the article, its way cheaper than equivalent licenses or services from MS.

Mark W. Kaelin
Mark W. Kaelin

This is a blog post and discussion in the Google in the Enterprise Blog, so it stands to reason that is what we'd be discussing.

Jim Mcnelis
Jim Mcnelis

@Adam - Good article. @Loggies Here are the data and privacy FAQs for Google Apps. http://support.google.com/a/bin/answer.py?hl=en&answer=60762 And here is a quote from the FAQs contrary to your statement above. I hope this helps you understand how Google treats your data a little better. "Who owns the data that organizations put into Google Apps? To put it simply, Google does not own your data. We do not take a position on whether the data belongs to the institution signing up for Apps, or the individual user (that's between the two of you), but we know it doesn't belong to us! The data which you put into our systems is yours, and we believe it should stay that way. We think that means three key things. We won't share your data with others except as noted in our Privacy Policy. We keep your data as long as you require us to keep it. Finally, you should be able to take your data with you if you choose to use external services in conjunction with Google Apps or stop using our services altogether."