Postini to boost Gmail's enterprise appeal

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Postini to boost Gmail's enterprise appeal

Gartner gives thumbs up to acquisition.

Google's proposed acquisition of email security firm Postini will boost the credibility of the search giant's Gmail offering among enterprises, Gartner predicts.

The analyst firm noted that Google's agreed offer of $625m in cash for Postini, which represents a price premium of close to 10-times revenue, was a relatively high price to pay.

Gartner describes Postini as one of the "most successful" of the hosted email hygiene vendors, competing primarily with Microsoft (which acquired FrontBridge Technologies in 2005) and MessageLabs.

A new Gartner advisory by Matthew W. Cain and Peter Firstbrook pointed out that Google's key long-term expansion plans target enterprise customers.

Postini's hosted spam and virus filtering, message recovery, archiving and content control services could be used to attract commercial Gmail customers, according to the analysts.

"Gmail is the most attractive component of the fee-based Google Apps suite aimed at businesses, but the initial incarnation (released in February 2007) lacked enterprise control and security services, diminishing its appeal to the corporate audience," the Gartner report stated.

"The uptake of Google Apps has generally been limited to small organisations. By buying Postini, Google will now own a strategic platform for offering sophisticated message hygiene services to commercial accounts, a business necessity for multiple types of messaging, including IM and VoIP services."

The analysts predict that the hygiene and control services represent a significant "upsell" opportunity for the US$50 per user per year Google Apps suite, but high add-on fees would probably threaten its pricing advantage over Microsoft Exchange, Google's chief competitor for enterprise seats.

They also point out that Microsoft is likely to launch an "aggressive" Exchange software-as-a-service programme next year.

Postini also represents an attractive commercial market channel for Google, according to the Gartner report.

"The eight year-old company has 11 million mailboxes under management from 35,000 organisations, representing larger enterprises and small businesses - the primary target for Google Apps," the analysts stated.

"Postini also maintains a healthy distributor channel which Google might exploit, although it has always favoured a direct-sales approach."
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