When you hear that Microsoft starts laying people off, you just know that the hole we’re in is deep indeed. Businesses everywhere are reporting worse-than-forecasted quarters, and while Google seems to be doing better than most, there may be many painful quarters yet to come.

If you’re a small business, you’re always in need of applications that let your employees e-mail, chat, collaborate on documents and manage their time with a calendar. Google’s answer to this industry need is its application suite, which mostly targets individuals and small businesses. Initially, a company could create Google Apps accounts for up to 200 of its employees for free. Beyond that, they needed to buy Premier licenses at $50 per user per year, which also offers additional storage, guaranteed uptime and technical support.

However, since then the number of users per domain has dropped from 200 to just 50, which if you were a 200-employee business means that you’re not looking at $10,000 per year in licenses. This would likely make IT managers think twice before going to Google Apps as opposed to alternatives like Zoho or Office.

From an industry standpoint, this is a good indication that it is becoming increasingly harder for businsses to thrive on ad revenue alone. The web has a strong culture of wanting everything to be free, and even companies with huge marketing budgets find it hard to break even, for example with Microsoft losing almost $500 million last quarter with their online services. Now of course it can be argued that the mere online presence that results from these services is worth more than than the operating loss, but regardless, it’s likely a rather tough pill to swallow for the company.

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