Google Buys a Manager of E-Mail
Taking further aim at one of Microsoft's core franchises, Google said Monday that it would acquire the e-mail security and management company Postini for $625 million in cash. — The deal underscores Google's ambitions to become a serious player …
Context & Ripple Effects
The Times' story lands one day after Google's own announcement of the Postini deal, and the paper's framing is explicit: $625 million in cash aimed at one of Microsoft's core franchises, with Google signaling it wants to be taken seriously in the market Postini serves. It is also Google's second communications-related purchase in under three weeks — the GrandCentral acquisition was disclosed on June 25 — suggesting a deliberate buying spree rather than a one-off.
What makes Postini different from a typical Google tuck-in is the buyer's target customer: e-mail security and management is sold to businesses, not consumers. The deal extends Google's reach beyond search and advertising into paid corporate infrastructure, squarely where Microsoft's e-mail franchise lives.
First-order effects
- Postini's corporate customers now face ownership by a company whose flagship e-mail product competes directly with the incumbent platform their security services have been protecting.
- Microsoft's e-mail franchise — until now challenged mainly on features — gains a well-funded attacker willing to pay cash to strip away the security-and-management layer that keeps enterprises on it.
Second-order effects
- Enterprises weighing hosted e-mail get a new bundle: security, compliance and message management attached to Google's offering, removing one of the standard objections to leaving Microsoft's stack.
- Microsoft is pushed to respond in kind around messaging security and hosted management, since the threat is no longer a rival mail client but a rival business model for delivering e-mail itself.
Third-order effects
- If the pattern holds, enterprise software competition shifts from selling licensed server products to selling hosted services with security folded in — forcing incumbents to reprice around subscriptions rather than per-seat licenses.
- Acquisition becomes Google's standard route into markets it cannot grow organically, as the two-week gap between the GrandCentral and Postini deals already indicates.
The trend: Consumer-web giants are buying their way into enterprise software, converting e-mail from licensed on-premise infrastructure into a hosted, managed service.