The number of paying users of Google Apps Premier Edition may increase with a just-announced change to Google Apps. Until recently, groups with 200 or fewer users could use the standard version of Apps, which costs nothing. Earlier this month, Google announced that groups with more than 50 users will be expected to purchase the Premier Edition, with an annual cost of $50 per user.

Guy Creese, a Burton Group analyst who authored a recent report on the potential of Google Apps in the enterprise, sees the move as Google’s bet that a good number of companies using the free version like Apps well enough to fork over the fees for the Premier Edition, which offers enhanced management, archiving and security features.

Rishi Chandra, Google Apps product manager, says the 50-user level is when most companies begin to desire the more sophisticated administration capabilities of Apps Premier Edition, including added options for managing user accounts.

Google also announced its intent to create a reseller program for Apps Premier Edition. Until now, Apps has been sold directly through Google’s Web site. It is also available through partners gained as a result of its Postini acquisition in 2007 and participants in its Enterprise Partner program, such as Capgemini.

It’s a good move on Google’s part, says Creese, as new partners will get Google Apps in front of more potential buyers. But he doesn’t think Google will see a big increase in sales until it addresses what he sees as fundamental shortcomings in Apps Premier Edition, including inadequate records management and an inability to read Office 2007 file formats. Instead of addressing these basic needs, he says, Google “has put its development prowess behind ‘ooh, aah’ features such as video sharing.”

Creese writes in a recent blog post: “This move is like a car manufacturer announcing they have an expanded network of dealers. Umm, OK, but does anyone want to buy the cars? And at the moment the answer is no.”

Participants will receive $10 for each $50-per-user, per-year subscription they sell, far less than the $150 or more per license they typically would receive for selling Microsoft’s Office suite of software. Yet a bigger opportunity exists for those who can develop and deliver value-added services with Apps, say Michael West and Mark Koenig, vice presidents of Saugatuck Technology.

“If resellers look at it in a vacuum, then they’ll probably walk away,” says Koenig. “But there’s a real opportunity here for those who can build applications and integrate them with Apps, to make it the center of other services they can provide to their customers.”

Google Spreadsheets presents an especially ripe opportunity, says West, because spreadsheets are at the center of so many key business functions, such as reporting and financial management. He also finds Spreadsheets more robust than Google Docs, which equates to Microsoft’s Word, or Presentations, which is similar to PowerPoint. “It’s quite clear that a reseller could implement solutions on spreadsheets to address specific SMB needs. When we talk to software-as-a-service vendors, many of them tell us they are trying to unseat existing Excel applications,” he says.

Both men believe Google is trying to build up a sales channel before the introduction of Microsoft’s Office 14, currently slated for late 2009 or early 2010. It’s widely believed that Office 14 will feature at least some software-as-a-service components. Based on past Microsoft releases, however, it’s possible that Office 14 may be late or riddled with bugs. Microsoft also has provided few details on what is expected to be a dramatically different financial structure for its sales partners. So Google could win resellers who tire of waiting for Microsoft to produce a credible SaaS offering, say West and Koenig.

However, says Creese, if Microsoft can bring Office 14 to market in the expected timeframe and with the right kinds of features, it could steal much of the momentum Google is working to generate. The glacial pace of change in most enterprises is working in Redmond’s favor.

“If Google had come out with a full-featured enterprise package, I think they’d be doing massive damage (to Microsoft), but they didn’t do that,” says Creese. “In a large corporation, if you fire the starting gun now, you might be able to get a conversion project going in nine months. So if Microsoft can come out with something in mid- to late 2009, a lot of IT people will just be inclined to wait.”

Google’s primary challenges with its reseller program are the fairly small financial potatoes that partners will earn for selling Apps Premier, its inexperience in working with channel partners, and uncertainty over how, if at all, the new reseller program will overlap with the existing Enterprise Partner program, say West and Koenig. Early partners “will have to help train Google on how to do this,” and that’s not something every company will be willing to do, says Koenig.

Google will likely find early interest among companies willing to make the shift from being a pure reseller to more of a developer/systems integrator, says Koenig.

“For resellers, if I am used to doing ‘install, integrate and walk away,’ it’s going to be a big shift for me to evolve into a company that can conceive of and build new add-on applications,” he says. “And if I am used to a revenue stream based on an upfront sales commission for some kind of a hardware and software bundle, then moving to a new and deferred revenue stream is also a shift. There’s a huge shift required to go down this path, but that’s going to be true of any reseller arrangement with any SaaS provider."