Another strategic move by Google–buying Postini for $625M. Postini has been a leader in the hosted email/IM security, archiving and compliance space. In addition to having well-thought out service offerings, the company has been able to operate on a big scale without embarrassing outages. (Fun fact: one of the reasons why Postini has been able to perform so well is that it uses digital archiving technology from Archivas, now part of Hitachi Data Systems. Archivas was my first investment at Polaris.)
The pitch of the acquisition announcement is that, by adding the Postini services to their portfolio of offerings, Google’s enterprise group will be able to address many of the concerns of larger enterprises not willing to move to Google’s hosted office productivity applications. I don’t buy this as the short-term reason for the acquisition. In the short run, larger enterprises won’t switch to the enterprise edition of Google Apps. I’ve been using Gmail, Google Calendar and Docs & Spreadsheets for a long time now. They don’t have the usability, offline capability and interop features to battle MS Office or Open Office now. I’m sure Google Apps will get there eventually with the help of time and Google Gears but not in the next 12-18mos.
The longer timeframe of extracting value from the Postini acquisition is one reason why I consider the acquisition strategic. The other is that through the acquisition Google is getting their hand on the content of 35,000 businesses and 10M users. That’s great for search and an important tool to help make Google Enterprise Search the winning product in this market. They have a long way to go, but the Postini move is a step in the right direction.