Updated Google has announced a plan to acquire on-demand web security firm Postini for $625m cash. The deal, which is subject to regulatory approval, is expected to close by end of the third quarter 2007, after which Postini will become a wholly-owned subsidiary of Google.
Postini's services - which include email filtering, archiving, encryption, and policy enforcement - are used to protect customers' email, instant messaging and other web-based communications from security threats and productivity drains such as spam and viruses. The firm competes with firms such as MessageLabs and BlackSpider (which was bought by SurfControl for around $42m in July 2006, prior to its own $400m acquisition in April 2007).
Postini's technology is used by 10 million users at 35,000 firms worldwide. BlackSpider protects 500,000 users at 1,200 customers (mainly in Europe). The difference in size goes a long way towards explaining why Google paid 15 times more for a similar set of hosted security technologies.
Google said it plans to use Postini's technology to boost the appeal of its Google Apps package of hosted office applications to larger businesses. It also pledged to continued to invest in Postini's existing line of hosted security products.
"The response to Google Apps has been tremendous, with more than 1,000 small businesses signing up for the service every day. At the same time, large businesses have been reluctant to move to hosted applications due to issues of security and corporate compliance. By adding Postini products to Google's technology, businesses no longer have to choose," said Dave Girouard, VP and general manager of Google Enterprise.
In a conference call, Girouard added without giving figures that there had been "significant interest" from large business about Google Apps but that complex security requirements and meeting regulatory compliance have acted as a barrier. "Up to date we have focused on partnerships to resolve these issue but we recognised it's in our own interest to pull things together" by buying a technology that can boost its hosted apps business.
Both firms said delivering software as a service offered several beenfits to customers such as ease of implementation and taking away maintenance headaches. "off the shelf software doesn't work," said Scott Petry, founder and CTO of Postini.
Google's Girouard added: "Software as a service is a better delivery method. Google didn't invent this, that was down to others, but we intend to capitalise on it." ®