Google Inc {GOOG} is moving to attract big business users to its Google Apps service just a year after entering the software market, as the company said on Tuesday it is offering stepped up e-mail management services at no additional cost to paying users.

Google, the market leader in Web search and online advertising for consumers, is introducing e-mail controls and anti-spam protections resulting from the acquisition of e-mail services supplier Postini, which it closed three weeks ago.

Enterprises which pay $50 a month per office worker for the Google Apps package of business software, e-mail and Web services will get 25 gigabytes of data storage each for no extra cost, meaning many users will no longer need to delete incoming e-mail.

The crowd pleasing move offers 50 to 100 times more than most users of rival e-mail systems such as Microsoft Outlook (MSFT), or IBM Lotus Notes are typically allotted by their organizations. Because Google delivers e-mail as a Web service, it can deliver storage at lower cost than traditional e-mail installations.

"This highlights the benefits of the software as a service model," said Matthew Glotzbach, project manager for Google Enterprise, the business unit responsible for Google Apps.

"It is virtually unlimited (e-mail) storage for business users. This is hard to replicate with the Microsoft Exchange model of locally installed software," he said.

Google Apps had initially targeted a free version of its Web-based software at small businesses and educational institutions worldwide. But its latest moves highlight the company's increasing ability to meet the security and central management software requirements of big businesses.

"This is not a big bang announcement. This is sort of like a machine gun that doesn't stop firing," Gartner analyst Tom Austin said, describing Google's relentless inroads into rival software makers' territory.

In another step to entice corporate users away from established business software providers, Google said it could now route e-mail from other e-mail systems alongside Google's own e-mail services. That removes a major inhibitor to businesses that can't move employees to Google Apps at once.


Austin said big corporations are only starting to consider using Google Apps as an alternative to traditional software from Microsoft Corp, IBM, Novell Inc (NOVL), Oracle Corp (ORCL) and SAP AG.

"I think we are at the beginning of a 10-year-cycle," said Austin, who advises corporate purchasers on strategies for buying and maintaining complex collaboration software for employees.

Austin predicted many organizations will wait until the next economic recession before deciding to quit maintaining their own e-mail systems and turning instead to companies like Google, Microsoft or Yahoo to deliver e-mail as a service.

"It is going to be take several years before major enterprises make big decisions about using e-mail as a service," he said.

Prior to being acquired by Google, Postini offered the services Google is now incorporating into its Google Apps premium edition for enterprise users at a cost of $25 to $30 per user per year.

Google plans to encourage existing Postini customers to switch over to Google Apps through a promotional offer that expires in June 2008. Postini counts 36,000 businesses and 11 million individual office worker customers of its services.

Postini separately sells archiving services for lasting e-mail preservation for compliance and legal discovery.

Since Google Apps was first introduced last year, Google has signed up hundreds of thousands of organizations, mostly small businesses which are not weighed down by the need to support complex existing business software. Officials said Google Apps is signing up 1,500 new businesses daily. Thousands of educational institutions also now use Google Apps.

Glotzbach said the company has begun pilot projects delivering e-mail services to dozens of Fortune 1000 companies. The projects, which remain in the early stages, cover anywhere from hundreds to thousands of users, he said.