Google is close to landing a contract with the NSW Department of Education and Training to support 1.3 million students with Gmail.

The deal for student e-mail accounts at public schools and TAFE colleges in NSW is not quite finalized. But it is expected to be worth roughly $9.5 million over a three-year period with an optional two-year extension, according to a release from Acting NSW Minister for Education and Training John Hatzistergos.

SMS Management & Technology, a local systems integrator, will handle the implementation, which will be in place by year-end, the release said. It beat off four other submissions for the tender.

The new email system will expand available storage from 35MB to at least 6GB per mailbox, offer better filtering and security and improved better search, according to the Department.

Beyond money, this particular type of customer win has major strategic value for Google as it attempts to wrest enterprise market share from dominant players like Microsoft, according to search analyst Stephen Arnold.

"Google's efforts to get students and academic institutions to use the company's cloud-based services like Gmail is part of the GOOG's strategy to penetrate the enterprise," Arnold wrote on his blog on Tuesday. "But it is a longer-term strategy because Google is willing to get students comfy with its products and services, let them get their jobs, and then pull Google along with them. ... The real payoff, to my way of thinking, will be the students who graduate with Google as part of their thought processes."