Turning point for small-business cloud productivity suites?

Last year, Google raised eyebrows when it stopped offering a free version of its Google Apps for small businesses. At the time, I wondered whether or not this could wind up helping Microsoft, which has been turning up the sales rhetoric behind its rival Office 365 cloud applications suite.

But upon further reflection and a conversation with Rich Rao (director of Google Apps for the SMB and Education markets), I think the move is more indicative of how serious Google is about winning over business for its blossoming cloud applications division.

Under the new policy, small businesses that want to use Google Apps have to opt for the Premium edition, which costs $50 per user per year (or $5 per user per month). Features of that service include 24/7 phone support, a 25-gigabyte inbox, and a 99.9 percent uptime guarantee. Current business users have been grandfathered on the free service.

"With focus, we'll be able to do even more for our business customers," wrote Clay Bavor, director of product management for Google Apps, at the time of the change.

The pricing change also makes it a whole lot simpler to compare Google Apps with Office 365 on the basis of their respective merits.

Now, small businesses can't be lured by the free-ness of the Google cloud offering--they have to look at the features and the backgrounds of the companies behind these respective services. And IT services and consulting firms that help small businesses with IT strategy have more than one legitimate tool in their cloud services tool back around which they can potentially build real-world solutions.

One phenomenon that Google is really counting on to drive both short-term and long-term adoption is the desire of many small businesses owners to apply technology they use in their personal lives for business purposes, Rao said.

That in itself isn't such a surprising revelation--it's the whole impetus behind the bring-your-own-device (BYOD) movement. But one thing that really comes down in favor of cloud applications is the fact that most of us are using at least two devices, now, to manage our schedules and lives. No one wants to waste time worrying about how to keep things straight or in provisioning new users when someone joins the team--either actual or virtual.

One other serious wildcard--one that actually favors Google--is the fact that at least one in three college students cite work mobility and the technology that they will be able to use on the job as factors they would prioritize in deciding where to work, according to data cited by Rao.

"People understand how transformative this can be," he said.

I also personally think that people's comfort level with the Chrome Web browser and the integration between the browser and Google Apps shouldn't be overlooked. One thing to watch closely is sales for Chromebooks, inexpensive notebook computers that essentially use the browse as the central operating system and user interface.

You won't hear Microsoft talk much about the specifics of Office 365 adoption, but Google claims about 5 million users for its cloud business productivity suite. New York startup BetterCloud just received $5 million in series A financing earlier this month to help businesses incorporate Google's cloud suite, another development that underscores how important the venture capital communities think cloud productivity suites will be in the future--as a new generation looks beyond the legacy of Microsoft Office.

You can read more about what business users are doing with Google Apps at its blog. For a miniature case study of how Google Apps has transformed management and communications for a small business in California, see the video below.