Google Seeks Expanded Software Sales

By Michael Liedtke

SAN FRANCISCO -- Google (GOOG Quote) is offering financial incentives to expand the sales network for the software it sells to businesses while restricting the use of a free alternative in its quest to make money on something besides Internet advertising.

Under a new program to be unveiled Wednesday, Google will sell a package of e-mail, word processing and other office applications to third-party software resellers at a 20% discount in the United States. It will be up to the participating merchants whether the savings are passed along to their corporate customers, said Dave Girouard, who runs Google's business software division.

Google charges a $50 annual fee per user for its premium software service, meaning the vendors will have to pay the Mountain View-based company $40 per user. Girouard suspects many merchants will maintain Google's $50 base price to help defray their own overhead and shore up profit margins during hard times.

To increase the pool of potential customers for the software, Google for the first time is capping the number of people who can use a less sophisticated, free version of the applications at 50 individuals per business.

The new limit doesn't apply to the thousands of mostly small and medium-sized companies that have already signed up for free software programs.

Schools and nonprofit organizations will still have unlimited access to the free version of Google's software programs, which are piped over Internet connections and run in a Web browser.

The delivery method, dubbed "cloud computing," is a departure from the long-standing practice of installing programs directly on individual computers owned by the company that needs the applications to help run its business.