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Small Firms to Pay for Google Apps

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Google Inc. , the world's most popular Internet search engine provider is making efforts to expand revenue beyond its core advertising services. Small businesses, which have been using the free version of Google Apps software so far, will now have to pay for the web-based office productivity suite.

Google Apps is a cloud-based productivity suite that helps people to work from anywhere on any device. Google Apps software includes email, word processing, spreadsheet and presentation tools.

Following the new move, businesses will have to bear a charge for using Google Apps Software. The company stated that firms with 10 or lesser number of employees will now have to pay $50 per user per year, the same amount that larger businesses pay for the apps. Individuals will still be able to access the free version of the products including Gmail but will be deprived of the additional services that the premium version offers.

Recently, Google said that its apps are used by more than 5 million businesses. Though the company has not disclosed the revenue generated by its enterprise business, it expects it to become an important part of Google's overall business going forward.

Google is a market leader in online advertising and it has been exploring various ways to increase its revenue beyond its core business. We believe this is Google’s latest move to increase its revenue in the face of cut-throat competition.

Google delivered a strong third quarter, with gross revenue touching a record $14.10 billion. Revenues, from both Google-owned and partner sites, continued to grow in double digits on a year-over-year basis. Historically, Google has always fared better than Yahoo (YHOO - Analyst Report) search, which has been struggling for survival and Microsoft’s (MSFT - Analyst Report) Bing, which is yet to gain critical mass.

However, legal entanglements related to competitive matters or patent infringements remain an overhang. Currently, Google retains a Zacks Rank #3 (Hold).

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