Google just removed their own ability to convert free customers to paid ones as they grew. Switching cost of email is extremely high, so a startup in this space could easily charge more than $50/yr/user once they're already in.
Granted they're lacking the integration with all of Google's other services, but given how bad google's multi-account sessions are and the fact that basically everyone is logged into their personal gmail account already, that might actually be a good thing.
Plus, $50/yr/user adds up pretty darn quickly at scale. Not as much as all of these video services that cost about $100/yr, but like I said, the cost of switching email providers is insanely high - once you have a customer, it's almost guaranteed you'll have them forever unless you screw up at massive, catastrophic scale. Though because of that, you have to have a crazy-good hosted offering to get people to sign up in the first place; demoing a mail service is hard and Gmail (personal) has been a great way to show what their paid services offer for businesses.