Google's acquisition of Web security service provider Postini for $625 million came as no surprise to industry analysts, who saw bundling enterprise-level security into Google Apps as the search
giant's next logical step toward SAAS ("Software as a Service") domination.
San Carlos, CA-based Postini will become a Google subsidiary, but its client base of 35,000
companies--including Circuit City and Mitsubishi Motors--will not be obligated to use the Google Apps suite of hosted services that include email, calendaring and instant messaging functions.
"We'd love for Postini's customers to try Google Apps, and we're going to make it as easy as possible for them to do so," said Dave Girouard, vice president and general manager, Google Enterprise.
"But [their] current services will be supported as a separate offering." This support will continue indefinitely, Girouard added.
Though the companies gave no time or logistic specifics for
integrating their sales teams, both Girouard and Quentin Gallivan, Postini's president and CEO, noted the benefit of having "more feet on the street" to shill the combined services.
According to
Google, some 1,000 small businesses sign up for Google Apps daily--although statistics don't differentiate between the ad-supported free service and the fee-based ($50 annual) Premier Edition--but the
suite's lack of integrated security and compliance technology has been a roadblock to widespread adoption by larger companies.
"Our solution had been to look to partners to fill in some of the
necessary security capabilities," said Girouard. "But asking users to pull the parts together diminishes the value of an SAAS offering, so this makes it much easier to deliver a quality end-user
experience."
Speculation about Postini's plans to go public had circulated for the past two years. Asked about this on Monday, Gallivan said, "We looked at our strategic options, and saw this
[the sale] as an opportunity to accelerate our growth. Google has the operational scale, a large international presence--and we share a vision for the future of on-demand enterprise software and
SAAS."
On Monday, both companies used the word "enterprise" liberally, further stoking industry buzz that Google is seeking to challenge Microsoft's position as business software leader. But some
analysts argued that, while the Postini acquisition is a step in the right direction, the search giant is still a long way off from becoming an SAAS giant.
"There's a big differentiation between
Google and Microsoft," said Tim Bajarin, president of Creative Strategies, a Silicon Valley-based consulting firm. "While the Postini security piece is a natural evolution for them, Google Apps is
still largely in the small business 'prosumer' space....They can target a wide swath of businesses that don't have the finances or the need for extremely robust software, but at this point, it doesn't
seem feasible for them to go after true enterprise-level companies."