New Direction

San Francisco, Aug. 28 (Reuters): Google Inc is making a concerted move beyond search and advertising into the business software market, starting with a set of Web programs for e-mail, scheduling and communications, it said on Sunday.

The online search leader said it has created a software platform to run basic business activities, which is based on programs it already offers separately. The move marks a stepped-up challenge to rival Microsoft Corp as the software giant prepares to upgrade its Windows and Office franchises.

The free set of Web-based programs for small businesses, universities and non-profit businesses goes by the mouthful “Google Apps for Your Domain” (www.google.com/a).

Later this year, Google said it will offer a “paid premium" version with the option of being ad-free and more administrative control and compliance features to meet the demands of bigger corporations and government agencies. Pricing for this more advanced version is not yet available, it said.

Google will host the applications relieving companies of the need to maintain or install software on individual PCs — support tasks often more costly than software itself.

“If we do it right, we get the best of both worlds — very consumer-friendly software, but also low-cost business applications,” said Dave Girouard, general manager of Google’s enterprise division, which sells search software to companies.

Individual office workers can sign on to Google Apps, short for applications, through their Web browsers.

Initial apps are Gmail Web e-mail, the Google Talk instant message and Web phone-calling service, group scheduling on Google Calendar, and Google Page Creator for Web page design.

“It really is intended to be a platform,” Girouard said.

“One of the fundamental benefits of the software as service approach is that you can just turn on new features over time.” The Writely word processor and Google Spreadsheet are candidates for future inclusion in Google Apps, Girouard said.

Software challenge

Google’s main appeal is to consumers of its popular Web search and advertising systems. By packaging a set of software for businesses, Google is responding to demands by corporate network administrators who prefer to manage a standard set of software inside organisations. Many are cracking down on the spread of individual consumer programs within their networks.

Sue Feldman, an analyst with market research firm IDC, said Google Apps moves the company into open competition with Microsoft in the business software market.

Anticipating Google’s moves, the world’s biggest software maker has responded with Windows “Live” — Web-based software for small business and consumers.