Google G Suite's New Pricing Plans Reflect Renewed Enterprise Focus


Archived Published: 03 February 2017 ID: G00325722

Analyst(s):

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Summary

Google's new pricing plan for its G Suite cloud office service is aimed at more demanding enterprise customers, and to appeal to larger organizations. Yet the modified packaging and prices could limit adoption.

News Analysis

Event

On 31 January 2017, Google announced a third pricing plan for its G Suite cloud-based communications and collaboration (cloud office) service. Above the $5 "Basic" small business and the $10 "Business" tiers comes an "Enterprise" $25 per user per month (PUPM) plan with extra security and management features. The Enterprise plan is not available to education customers. Google's prices have remained largely unchanged since the introduction of the basic service in 2007 and Vault in 2012. All prices represent undiscounted "list" prices.

Analysis

The addition of an Enterprise SKU at $25 PUPM should be seen as part of Google's efforts to serve larger enterprises. It adds extra security and management features not previously available, such as data loss prevention (DLP) for Drive, third-party archiving support, Gmail log file analysis, and enforcing the use of a hardware authentication key (useful for preventing phishing attacks) and S/MIME for Gmail. DLP for Gmail moves from the $10 Business plan to the $25 Enterprise product. Business plan clients who buy before the end of March 2017 will be grandfathered to use Gmail DLP until January 2020.

Google's positioning of the plans makes sense:

  • Basic = small office/home office (SOHO) business

  • Business = most companies with “normal” needs

  • Enterprise = organizations with higher-level demands

The $25 price level is a big step up from the $10 existing tier, and will be hard to justify until Google adds more features. The current features in the Enterprise edition will help Google challenge Microsoft's Office 365 in larger organizations that value these capabilities. However, Office 365 offers more features in its comparable E3 plan at $20. We expect to see discounting for high-volume users. Most of the features in Enterprise are new, so there is not much product disruption. However, it will be a tough call for existing customers who need DLP for Gmail, who will see their bill rise by 2.5x at some point.

Recommendations

Application leaders responsible for cloud office projects:

  • If your organization has advanced security concerns, evaluate the new capabilities announced today.

  • If your organization is using DLP for Gmail, contact your sales representative to ask how this change will affect you.

  • If you currently have offers on the table for G Suite Business, sign before April 2017 if you want to have grandfathered access to Gmail DLP until 31 January 2020.

  • If your organization is an educational institution that is using G Suite and wants the new Enterprise features, contact Google to find out how you can gain access to them.

  • Do not classify Google as a low-cost supplier, especially for higher security requirements.

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