IBM undercuts Google with discount e-mail service

ARMONK, N.Y. -- IBM is trying to stymie Google's expansion into business software.

IBM is now selling a bare-bones e-mail service to companies for $36 annually per worker. That undercuts a more comprehensive package of e-mail and other software applications that Google sells for $50 per user annually. However, Google's offering includes 25 times more storage per account.

The IBM service represents the technology company's response to the increasing corporate demand for inexpensive e-mail that's run on computers owned by an external supplier. This approach has become trendy enough to get its own catch phrase -- "cloud computing" -- and is one way that Google has been trying to steal customers from Microsoft.