MOUNTAIN VIEW, California: Google has thrown down the gauntlet to Microsoft with the launch of its latest business software package, Google Apps Premier Edition. The suite offers email, instant messaging, calendar, word processing and spreadsheets for $50 (€38; £25.63) per worker per year compared with up to $600 for Microsoft Office.

The internet search leader is expecting to add further services to the bundle, including a blogging facility, by the end of the year.

Google denies any desire to compete directly with the software titan in the corporate arena. Placates Dave Girouard, general manager of the business software division: "We are not in this to get Microsoft. We are in this to offer more compelling choices for consumers and businesses."

But analyst Jim Murphy, from Boston-headquartered AMR Research, is not convinced by Google's benign sentiments and warns: "This is just the beginning. The real impact of what Google is trying to do probably won't be evident for another five years."

If Google can up its sales of software to the corporate sector it could become less dependent on the fickle finances of advertising. Its software licensing accounted for slightly more than $100 million, or 1% of $10.6 billion in revenue last year.

Microsoft, meantime, relied on software sales for most of its $44bn billion in revenue in 2006 but claims to claims to welcome the latest competition.

Grimaced Kirk Gregersen, the company's director of the Office suite: "It helps keep us on our toes."

Data sourced from Wall Street Journal Online; additional content by WARC staff