Google Bags Postini to Shore Up Applications

UPDATED: Google  today took a major step toward protecting its Web applications business by bidding to acquire partner and on-demand security software maker Postini for $625 million in cash.

Postini’s software services protect, encrypt, archive and enforce policies for e-mail, instant messaging and other Web-based communications. Google intends to underpin its Google Apps hosted software, which includes Gmail, Calendar, Talk, Docs & Spreadsheets, and Personal Start Page, with Postini’s hosted security software.

“There’s a fundamental premise to what we’re doing here,” said Dave Girouard, vice president and general manager of Google Enterprise, on a conference call.

“It’s centered on the idea that if you combine the user-centricity and simplicity of consumer applications with the manageability, the cost-effectiveness and security in enterprise technology, you would really have the best of both worlds.”

The bid comes as companies have increasingly been turning to hosted applications so they don’t have to worry about knotting up their infrastructure by installing software to their premises.

With Postini’s security software and Google’s Apps, corporations can use embrace the software-as-a-service (SaaS) model without putting the onus on their administrators to install and maintain traditional applications packages, said Girouard.

However, one of the drawbacks of the SaaS approach has been the lack of security and the inability to meet compliance regulations and conduct legal discovery.

While more than 100,000 businesses and hundreds of universities currently use Google Apps, some larger businesses have been loath to use them because of the lack of protection against data loss and the dearth in measures to meet Sarbanes-Oxley and other rules associated with protecting data.

Girouard said that while Google has treated such issues by partnering with security and compliance providers “we really believe that asking customers to pull the parts together themselves quickly begins to drain some of the value out of this software-as-a-service revolution.”

With Google tacking on Postini’s products, the search giant hopes to ease such concerns, opening the door for bigger revenue streams.

The buy should also give Google another leg up on rivals Yahoo  and Microsoft  neither of which have made such strides in securing hosted software. However, Microsoft does protect messaging thanks to its FrontBridge Technologies purchase.

The stage was actually set for the deal in April, when Postini began offering its security software to support Gmail.

At the time, Osterman Research President Michael Osterman suggested to that Google could well use Postini software to protect Google Apps. That theory has been proved prescient.

Google, which will continue to support Postini’s 35,000 business customers and invest in Postini products, expects to close the deal by the end of the third quarter 2007.

Postini is Google’s first target since last week’s purchase of GrandCentral Communications, which lets users integrate all of their existing phone numbers and voice mailboxes into one account so that they can be accessed from the Web.

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