If ever there was a market made for SaaS, it was surely the email archiving one. Google’s decision to acquire messaging outsourcer Postini for $625 million (£303m) in cash looks like the kick-start this space needs.
Dave Girouard, vice-president and general manager for Google Enterprise, notes: “We’ve seen a significant amount of interest from large businesses. But large businesses have been reluctant to move to hosted applications due to issues of security and corporate compliance.”
So what does Google get out of this? AMR Research’s Jim Murphy thinks it’s value for money: “$625m seems exorbitant for a company that, though profitable and growing healthily, likely saw a small fraction of that figure in revenue. So Google paid a premium for this. And no, we don’t think it’s simply because Google has a lot of money to spend... the acquisition will ultimately support Google’s play for the enterprise, even its evolving play for the large enterprise. Postini it will act as a platform to help companies deal with existing and emerging compliance issues, especially as they pertain to email communications now, and very possibly real-time communications and voice later.
“Mounting regulatory compliance and litigation pressures have already sent companies scrambling to corral unmanaged and unregulated email, centralising email stores, setting records retention policies, and standardising on messaging platforms, most often Microsoft Exchange or Lotus Notes. So most large enterprises couldn’t begin to think of introducing yet another email system with hosted email stores outside of the company’s control. As a hosted service backing up Google Apps, the Postini acquisition is designed to help remove this objection.”
Gartner also thinks the move is a good thing – analyst Matthew Cain argues that it will spark further consolidation in this sector: “The Postini business model and architecture is custom fit for Google. It is an entirely hosted model where all mail is sent through the Postini network prior to delivery to the enterprise (or external recipients, if outbound). Billing is done on a per-user, per-year model, and ranges from a low of about $1 (£0.48) per user, per month for basic spam and virus filtering, up to $4 (£1.94) per user, per month for a complete set of services. Postini has been one of the most successful of the hosted hygiene vendors — it competes primarily with Microsoft (which acquired FrontBridge Technologies in 2005) and MessageLabs, a UK-based company that also is an attractive acquisition candidate. We expect Cisco and Symantec to directly enter the email hygiene SaaS market in the next 12 to 18 months.”