Small and medium sized business customers are flocking to Google Apps. One of Google‘s spokespeople said that they were adding 2,000 customers per day at the end of 2007 and 3,000 customers per day at the end of 2008. I decided to do a little math to see what this all meant. Assuming that Year 1 growth had rate X and they started Feb 2007, that meant that they had an approximate daily growth rate of  0.9% per day. This would allow them to start with no customers and end up with a daily add rate of 2000 customers per day by the end of 2007. I assumed further that for 2008 and 2009, the growth rate would remain more constant (not really a great assumption but it will work for this napkin exercise.)  Since they went from 2,000 customer adds/ day to 3000 customer adds/day, that meant a daily compounding growth rate of .11%. Factoring in all of the above measn that if they had lost zero clients, they would have approximately 111,000 customers at the end of 2008. They claim 1M, meaning that they are shedding approximately .05% of their customers per day or 1 in 2000. If that’s correct, that’s a staggeringly low churn rate!! At these rates, it looks like Google will reach 2M customers by end of 2009 and 3.5M by end of 2010 (holding all growth rates at the same daily rate.) Using Google’s 10 user to 1 customer ratio, that means 20M business users working inside Google Apps. Smells like opportunity to me. What else do those users need?

It’s also nice to see that Google continues to march inexorably forward and continue to solve the non-trivial tasks of making their online apps work offline. First came Google Docs Offline in March 2008. Now they have released Gmail Offline and Google Calendar Offline. The offline Gmail at least lets you send new messages. The offline calendar is limited and read-only which seems hardly worth the bother. Why not just subscribe your iCal or Outlook to your GCal and be done with it? But I’m guessing that these are just incremental steps towards greater functionality that will be released over time. One of the most interesting things for me is that they are releasing this functionality to paying “Google Apps” clients first. Nice to see that paying for a web app gets you to the front of the line. I actually LIKE that. I wish the Google apps team continued success. Having lived in Google Apps for the better part of the past  year and half, I find the tools to be an incredible value.

[UPDATE June 15, 2009: According to TechPulse360, Google’s Dave Girouard stated that the five year old Google Apps program “has attracted 1.75 million businesses – with dozens of them with more than 1000 employees – and totaling more than 15 million active users.” Which means that they may be ahead of the trajectory noted above. Great progress Google Apps team.]