San Francisco:Taking further aim at one of Microsoft’s core franchises, Google said on Monday that it would acquire the email security and management company Postini, Inc. for $625 million (Rs2,525 crore).
The deal underscores Google’s ambition to become a serious player in the business of selling software to companies and organizations, in competition with Microsoft and others.
Google, which earns the vast majority of its profits from selling ads it places next to search results and on sites across the Web, has increasingly emphasized its small but rapidly growing software business. Earlier this year, Google’s chief executive officer, Eric E. Schmidt, had said the firm’s strategy was made up of three components: “search, ads and apps”, or applications, meaning software programmes.
As part of that strategy, Google has been trying to persuade businesses to replace existing email systems and other programmes with the company’s own package of business software. That package, called Google Apps, includes the Gmail service, an online calendar, and programmes that can read and edit documents created with Microsoft’s Word and Excel.
But many businesses remain leery of moving some critical functions such as email to Google’s programmes, which, unlike traditional business software that resides on corporate networks, are delivered as services over the Web and are considered less secure.
The acquisition of Postini, whose products allow businesses to control spam and viruses, and help them to monitor and preserve email messages to comply with regulations, is an effort by Google to allay some of those concerns.
“In bigger businesses, security and compliance requirements are a must,” said Dave Girouard, Google’s vice-president and general manager for enterprise.
If completed, the deal would be the third largest acquisition in Google’s history, after its planned $3.1 billion purchase of the online advertising company DoubleClick and its $1.65 billion deal for YouTube.
Google and other companies believe that software will increasingly move to the Web and will often be free and supported by advertising. Over the last year, Google has pursued that vision with efforts to turn some of its Web programmes into business tools.
Last year, the company began to offer firms, academic institutions and non-profit organizations a version of Gmail and other business applications at no charge. In February, Google packaged a broader set of business programmes, including a word processor and spreadsheet, into Google Apps and began charging businesses $50 a user annually for a version that includes customer support.
By comparison, market researcher Gartner estimates that businesses pay an average $225 a person annually for Microsoft Office, which includes Word and Excel. NYT