Google Apps can be a small firm's best friend

When Ritu Raj opened Wag Hotel here as a luxury home-away-from-home for pampered dogs, he decided he would run the business on Google goog applications.

Employees check in dogs on touch-screen monitors, make appointments and use e-mail, all with Google Apps. The Web-based suite of tools — which includes corporate e-mail, calendar, word processing, spreadsheets and presentation software — is aimed squarely at Microsoft's msft lucrative Office software franchise.

For Raj, the decision started with cost. Apps is cheap or free, has more liberal usage terms than Office and doesn't require a tech team to set up and manage.

"But it's not just that," he says. "You have no idea how much time it takes to train people. The young people we attract to work here are very familiar with Google. That's a tremendous savings."

Microsoft Office is a software behemoth in Corporate America. But as Microsoft tries to absorb Yahoo in a proposed $44.6 billion takeover — the better to make inroads into Internet advertising, which Google now dominates — Google is moving ahead with initiatives to fight its way onto Microsoft turf.

A free version of Google Apps does not include tech support. For $50 a year per employee, a Premier version includes tech phone support and more e-mail storage. Universities get Apps for free. Some large ones have signed on, including Arizona State University and Northwestern University.

Google Apps product manager Matt Glotzbach says the company has picked up 500,000 customers for Apps since it launched in February 2007 and is adding 20,000 users every day.

Still, that barely registers a dent in Microsoft's Office armor. The software giant says it has more than 500 million Office users. Some 62% of U.S. businesses use Microsoft's Outlook e-mail software, compared with less than 1% for corporate webmail like Google's, says Tom Austin, an analyst at researcher Gartner.

Free webmail for small companies is fine, says Chris Capossela, a Microsoft senior vice president. As companies grow, they'll want "far more control over how (their) data is managed," he says.

Microsoft's Office Live offers free e-mail like Google's, plus tools to create a free website. For $19.95 a month, customers also can share online documents.

Traditional big-company Office packages run about $400 per employee. And companies must run a dedicated e-mail server (from $699 to $3,999) from Microsoft or other companies.

As a small employer with less than 50 workers, Raj is content with the free version of Google Apps. "I don't need tech support with Google. The programs work flawlessly," he says.

Making inroads at small firms

For now, Google is a more serious threat to Microsoft among smaller companies, says analyst Jim Murphy at AMR Research.

Using Gmail is a big attraction for some small firms. By 2012, business use of Web-based mail will jump to 20%, says analyst Austin at Gartner.

"Customers don't know they're sending it to a Gmail account," says Chris Montgomery, whose family runs four Midas Muffler shops near Houston. "They're sending it to Midas, which makes it more professional."

Before switching, "We constantly had issues with our e-mail being down," says Jeremy Stoppelman, CEO of Yelp, a website that offers local listings and reviews. "Now, instead of having an IT person maintain the system, we can devote those resources elsewhere."

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