Uh-Oh Microsoft Office: Google App Users Up by Two-Thirds in Eight Months

According to figures from Google (GOOG), the number of Google Apps users is rising so fast that the only thing with sharper growth is likely the blood pressure of Microsoft (MSFT) CEO Steve Ballmer.

A Google blog post yesterday claimed that 25 million people had "switched to Google Apps." Compare that to the 15 million users that Google Enterprise product management director Matt Glotzbach told me the company had back in early July 2009. Assuming that rough math is accurate, that's 67 percent growth in about eight months -- an adoption increase that is more remarkable because it started with a large number.

Of course, that's users-as-claimed, and the numbers requires a few qualifications. In July, the 15 million were explicitly all people that had free accounts. There was no qualification of how frequently they used them or whether the people had stopped using Microsoft Office, so the word "switched" is a stretch. My guess is that the company continues to count all people who have signed up for an account, whether they use them or not. There is no way to know without Google running an analysis and sharing the results how many of the now 25 million are regular users or what parts they use.

Glotzbach explicitly noted that last year's 15 million included 1.75 million business entities" that "range anywhere from small mom and pop companies to Geneentech, Morgan Hotel Group" as well as "university users" that had access to a special education edition of Google Apps. However, Glotzbach said that at the time, the number of paid users was in the "hundreds of thousands." Even at 500,000 and $50 per user, that would have been $25 million in revenue from the product line, which isn't much to write home about when you're talking about a market the size of office productivity software and you've got a brand name as big as Google's.

In other words, somewhere between 3 and 6 percent of Google Apps users are paid-for, which is a range consistent with other software companies I've spoken with that use a freemium model: give away access and charge for premium services. With the current 25 million, that would translate into between 750,000 and 1.5 million subscribers.

However, that's no comfort to Microsoft, which depends on the cash influx from Office like a junkie depends on a fix. If a greater number of users migrate to Google Apps, Ballmer doesn't care how much they pay. Whatever the number, it means that much less to Microsoft. Google's continued introduction of such features as the apps marketplace and the tool Google just released to help companies switch from Microsoft Exchange email is only going to make the migration worse.