Small businesses with fewer than 10 employees will no longer receive free use of Google's popular online productivity suite, Google Apps. Google announced last week that all businesses will be subject to the same $50 per user per year.
Google explains that support is the chief reason behind eliminating the free service. The cost of maintaining the service increased as more small businesses sought technical support from Google, increased storage capacity and advanced features.
Eliminating free Google Apps service for small business has been part of an ongoing progression. For the past three years, Google has steadily reduced the number of seats it would support for free from 100 to 50 to 10. Pricing, however, has remained consistent.
Google isn't saying much about the move beyond what was stated on its official blog. Officially, ending free service is about ensuring all businesses have access to support and features they want and need.
Unofficially, Google is opening a potential pool of millions of small businesses to the channel to service.
Until now, Google partners had to hunt for customers with the high chance that they would run into accounts already using free versions of Google Apps. The steady reduction of free service progressively opened more potential accounts to resellers, who receive 20 per cent of the service fee plus whatever value-add service sold on top.
How big an opportunity is Google creating? According to the US Department of Commerce, the United States has more than 29 million business entities, with 98 per cent having less than 10 employees.
The challenge facing resellers is how to convince these small businesses to pay for a service they have received for free and with little need for support.
The magic of Google Apps is its simplicity. Does it do everything that Microsoft Office does? Does it have the same robust capabilities as Microsoft Exchange or Lync? And does it operate even when connectivity is lost? No. But for the price - free - and automated support that comes with a cloud-based service, Google Apps is adequate for most small businesses.
The good work Google has done in automating adoption and functionality will potentially hinder a transition. Many businesses are blissfully unaware of the complexity masked by Google's service.
Setting up Google Apps is relatively simple, which reinforces small-business perceptions.
Resellers selling into these accounts will have to deal with two challenges: convincing small businesses that they need professional migration and ongoing support, and how to earn money selling to these accounts. At $50 per user per year, solution providers will receive $100 per account annually for a 10-person business. Making money on this segment will require selling products, add-ons and attached services to increase the yield.
Many Google partners and unaffiliated resellers have carved out a niche customising Google Apps and extending functionality with add-on tools. Extensions, such as backup, have proven quite valuable to universities and midmarket companies. Whether they'll appeal to very small businesses is unclear.
The alternative is selling in volume. This option may work for the likes of direct market resellers. However, volume sales have never been the forte of the SMB channel. The channel sales capacity simply doesn't exist.
Just how will the channel engage in the cloud apps market? This remains a concern. Microsoft partners, for instance, are concerned about channel conflict.
Given that small businesses can start trials of Office 365 directly via Microsoft, many may believe the potential for accounts or opportunity hijacks is increasing.
Google is quietly touting the channel benefits of ending free Apps service. While Google and many partners believe this will open more accounts to potential channel sales, Google will still offer the service as a direct sale.
The service change does not affect individual users or Google Apps for Education, which will remain free.
Larry Walsh is president and chief executive of Channelnomics
As part of our special editorial partnership, CRN is publishing this recent article from Channelnomics.
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