Security vendor Postini acquired by Google

Search engine giant Google says it will use its acquisition of security and compliance vendor Postini to expand its hosted applications for businesses.

This raises the profile as software-as-a-service as a model for delivery ... Google is making a bigger bet on the enterprise.
Peter Firstbrook,
research directorGartner Inc.

Google Inc. has agreed to acquire security and compliance vendor Postini Inc. for $625 million in cash, promising to use the company's technology to harden defenses around its popular line of hosted applications.

Postini, a San Carlos, Calif.-based vendor that sells email and messaging security and compliance tools has 35,000 customers. Its services include message security, archiving, encryption, and policy enforcement to protect a company's email, instant messaging, and other Web-based communications.

Under the terms of the agreement, Google will acquire Postini for $625 million in cash and Postini will become a wholly-owned subsidiary of Google, according to a press release the companies issued Monday morning. The deal is expected to close by the end of the third quarter 2007.

Postini's security tools are sold to companies in a hosted model. The vendor's Perimeter Manager service offers email content filtering, and spam blocking features. The software quarantines or tags suspicious email before it reaches a company's perimeter.

Google has been selling Postini as a premium service to its enterprise customers. The acquisition could enable the search engine giant to better compete against Microsoft, which sells spam and virus protection with Exchange Server, said Peter Firstbrook, a research director of information security and privacy at Stamford, Conn.-based Gartner Inc.

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"This raises the profile as software-as-a-service as a model for delivery," Firstbrook said. "Google is making a bigger bet on the enterprise."

The acquisition also gives Google better access to email administrators that are part of Postini's customer base, he said. The Postini customers are already predisposed to using software-as-a-service, Firstbrook said.

"With this transaction, we're reinforcing our commitment to delivering compelling hosted applications to businesses of all sizes. With the addition of Postini, our apps are not just simple and appealing to users -- they can also streamline the complex information security mandates within these organizations," said Eric Schmidt, Google's chairman of the board and chief executive officer, in a statement.

The search giant claims its popular line of applications, including Gmail, Calendar, Talk, Docs & Spreadsheets and Personal Start Page, has been adopted by more than 100,000 businesses to date. But Dave Girouard, vice president and general manager of Google Enterprise, admits security concerns have prevented some companies from embracing Google tools.

"By adding Postini products to Google's technology, businesses no longer have to choose -- employees get the intuitive products they want, and the company achieves the security and assurance it needs," Girouard said in a statement.

This is the latest in several moves Google has made recently to bolster its security. In May, Google announced its acquisition of Mountain View, Calif.-based security firm GreenBorder Technologies Inc., which specializes in sandbox technology to defend email and Web users from malware. Around the same time, the search giant started the Google Security blog.

The acquisition also reflects the larger trend of consolidation in the IT security market, as standalone security vendors struggle to survive and big IT infrastructure providers use acquisitions to integrate more security into its product development lifecycles. In the last month, for example, HP has announced its acquisition of SPI Dynamics and IBM has announced its purchase of Watchfire Corp.

While IT professionals have lauded the smoothness of some acquisitions, such as the merging of Internet Security Systems (ISS) into IBM and the merging of CipherTrust Inc. into Secure Computing Corp., they say they've watched other vendors buy up good security technology only to let it languish.

Quentin Gallivan, president and chief executive officer of Postini, promises that won't happen when his company becomes part of Google.

"We share a commitment to providing enterprise customers with compelling technology alternatives," he said in a statement. "This is an exciting milestone, one that will certainly lead to the next level of rapid innovation."

Google said it will continue to support Postini customers and invest in Postini products.

News Editor Robert Westervelt contributed to this story.

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