Google lowers switching cost by offering Apps for Work for free to Microsoft users

Google Inc offers free apps for work business that are currently locked into agreements with other office software vendors. The free apps  will make it easier and cheaper for big companies to walk away from Microsoft Office.  

The Google Apps for Work will remain free until the enterprise agreement with another provider runs out.

Google Apps for Work includes word processing, spreadsheet, and presentation apps that similar to the Word, Excel, and Powerpoint of Microsoft Office. The package also has a new feature like voice typing.

If a company under Microsoft enterprise agreements switches its business app to Google Apps for Work, Google will also chip in on some of the deployment costs from other vendors, according to the Official Google for Work blog.

Google asserted that the apps will be cheaper for a lot of businesses. Its estimated that businesses with basic enterprise agreements and no dependencies can save up to 70% by switching to Google Apps for Work.

According to Reuters, approximately one million businesses are paying to use Apps for Work. Normally businesses pay $5 to $10 per user per month for a basic and advanced version of Apps for Work.

Businesses use Microsoft under enterprise agreement that will ensure their loyalty with the vendor. The agreement includes three years lockout and during the contract period Microsoft gives discounts on enterprise apps to business company.

Once businesses are locked out to an enterprise agreement, they will not even look at other alternatives like Google Apps because they have to pay for the vendors during the agreement's period no matter what. Google's strategy to market Apps for Work will be able to overcome the problem.

Google Apps for Work free offer is limited to 3,000 people per defecting customer, according to Huffington Post. Even with that limitation, Google will be foregoing $180,000 to $360,000 in annual revenue if a company with 3,000 people signs up for the offer.

Google also offers an additional incentive up to $75,000 to each company switching to Google Apps for Work to cover the costs of switching.

Google claims that the offer will be a big momentum in the enterprise space. It claimed that 60% of US largest corporations use Google Apps in at least some capacity. There are over 600 companies outside the US using Google Apps with over 10,000 paying users.

Google's strategy to offer free switching is designed to push Google deeper into the enterprise, now that the product is well understood.

Google also faces a stiff competition from Microsoft 365, which is also using enterprise presence to push its own cloud-based, subscription-based service.