In its initial beta version, is a free service that can be customized by users and includes the Gmail, Google Calendar, Google Talk, and Page Creator tools. Businesses can create a Web page and access a Web-based control panel to manage their account list, set up aliases and distribution lists.

Taking Gmail to the Next Level

Google Apps is essentially an expansion of the the Gmail for Your Domain service, introduced in February 2006, and is offered in two versions. The standard edition is available to smaller businesses and non-profits as a free beta product and includes 2 gigabytes of e-mail storage for each user. The premium version, for larger enterprises and ISPs, is still in the works, with the list of hosted services to be offered and pricing to be announced at a later date.

In addition to managing the e-mail server , Google Apps will also provide spam and virus filtering in an effort to ensure a higher level of service and security than internally managed applications can provide. Google Apps for Your Domain is designed to be easy to use, with a focus on search and collaboration .

The ultimate objective is to provide a service for organizations of all sizes so they can communicate and share information more effectively by eliminating the expense and time associated with maintaining a communications infrastructure . And that type of on-demand software delivery is becoming more attractive to businesses.

On the Right Track

According to a research report from IDC, applications that are intuitive and offer the same navigation experience as the Web are features that customers have come to expect. IDC's recent Software on Demand Adoption Study shows that 21 percent of poll participants indicated that they have purchased and/or are considering an on-demand messaging application.

Google Apps goes head-to-head with Microsoft Office Live, which also offers on-demand e-mail, collaboration, and Web page tools with a similar re-branding approach and mix of free ad-sponsored, or subscription offerings.

"We can expect to see competition between Google and Microsoft heat up as the offerings and strategies from the two companies mature," the IDC report states. "Google is playing its cards close to its chest, of course, but admits it will be adding more capabilities to Google Apps by the end of the year." A Google office suite that includes Google Spreadsheet, Writely, Picasa, and other applications for handling content is likely to be added later, IDC suggests.

"The changing workforce realities, such as part-time employees, outsourced work, and mobile workers, increase the appeal of on-demand solutions that are accessed over the Web and managed and maintained by the provider," IDC notes.

That said, IDC enterprise software analyst Stephen Elliot said that making the transition from free services for smaller operations to a paid offering for larger companies could be tricky for Google.

"There are still questions surrounding how the enterprise version will be sold, either by subscription or some other fashion," said Elliot.