IBM Undercuts Google With Discount E-mail Service

MICHAEL LIEDTKE

SAN FRANCISCO (AP) — IBM Corp. is trying to stymie Google Inc.'s expansion into the business software market.

The weapon: a bare-bones e-mail service that IBM is selling to companies for $36 annually per worker, undercutting a more comprehensive package of software applications that Google sells for $50 per user annually.

For that slightly higher price, Google is offering 25 times more storage: 25 gigabytes per account compared to IBM's 1 gigabyte per mailbox. Google also throws in word processing, spreadsheet and presentation applications, as well as a video channel. None of those features are included in IBM's package.

Even so, IBM believes its service, called LotusLive iNotes, can beat Google because it has a much larger sales force and relationships with corporate customers going back long before Google co-founders Larry Page and Sergey Brin were even born in 1973.

"This is trouble for Google," said Gartner Inc. analyst Matthew Cain.

Armonk, N.Y.-based IBM is responding to the increasing corporate demand for inexpensive e-mail that's run on computers owned by an external supplier instead of the company relying on the service. This approach has become trendy enough to get its own catch phrase — "cloud computing."