Google buy shakes up email archiving

Google Inc. announced this week that it intends to acquire messaging outsourcer Postini Inc. for $625 million in cash, a move that storage analysts say could be the beginning of a shift in the email archiving and e-discovery markets toward outsourced, Web-based Software as a Service (SaaS).

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Google has made no secret that the acquisition is meant to boost its sales story to enterprise customers considering its Google Apps Premier Edition product package announced in February. The package, which is sold on an annual subscription basis, includes Gmail with 10 GB inboxes, as well as office productivity software such as Google Docs and Spreadsheets, and is meant to target large companies.

"We've seen a significant amount of interest from large businesses," said Dave Girouard, vice president and general manager for Google Enterprise, on a conference call announcing the intended acquisition on Monday. "[But] large businesses have been reluctant to move to hosted applications due to issues of security and corporate compliance."

Postini, meanwhile, has offered not only email security and antivirus services on an enterprise scale, but it has offered them as a service -- precisely why Google had been partnered with them prior to the acquisition. But, according to Girouard, "asking customers to pull the pieces together themselves drains value from the 'SaaS revolution' we've been seeing."

Enterprise storage and data management analysts have been critical of Google's offering since its initial release when it comes to its enterprise readiness. However, Postini has several capabilities that at least have the potential to address some of the issues. For example, currently there's a limit for Gmail users of 500 outgoing messages per day. This feature stems from Gmail's consumer applications as an anti-spam measure, but may no longer be necessary given Postini's large-scale anti-spam features. (Google is keeping mum for now on its joint roadmap with Postini.)

Because of those possibilities, some in the industry see big implications for the acquisition.

"Google's been undertaking a big push to figure out how to put corporate Gmail in the enterprise," said Brian Babineau, analyst with the Enterprise Strategy Group (ESG). Security and compliance were a "hurdle" to that before the acquisition, but once Gmail starts to offer enterprise-level security and compliance control measures, Babineau said Microsoft might have to watch its back.

"People now will say, 'oh, no one's going to get rid of Exchange'," Babineau said. "But it's a generational thing -- newly graduated employees are joining businesses from college already standardized on Gmail, and many corporations are saying, why manage Exchange when employees are already used to this Web-based, outsourced interface?"

Babineau didn't go so far as to predict total dominance for Gmail, at least not in the near future, but said that email archiving companies will begin to focus more on supporting the application alongside Exchange and Lotus Notes, and begin targeting features within their products to service providers like Google and Microsoft, rather than end users.

"I think that's ultimately the only way the [email archiving] market will stay around," he said.

IDC's VP for collaborative computing and enterprise workplace research Mark Levitt stopped short of agreeing that direct sales opportunities for email archivers will begin to dry up. However, he said, enough of the market is currently considering a move to SaaS products -- including, he said, a few Fortune 50 customers he's spoken with recently that are "seriously considering" a move to Gmail -- that "every company offering IT software today should have a hosted version, or a version compatible with hosted offerings."

At least one of today's email archiving players, meanwhile, appears to see the same writing on the wall. According to T.M. Ravi, founder and CEO of Mimosa Systems Inc., his company believes Gmail will be worth supporting in the near future as an enterprise email application.

"It's in the very early stages, but given Google's success with consumers, we expect to see them make inroads [in the enterprise], particularly at educational institutions and nonprofits," he said. "We intend to support Gmail within the next 12 to 15 months as Google begins to acquire customers and play more heavily in the traditional enterprise."