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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.