Google Gets Down To The Serious End Of Going After Microsoft
0Overall Score

Google is now getting down to the serious end of its battle to take on Microsoft in the online application market with the acquisition of the security software outfit Postini by designed bolsters, a product suite designed to loosen Microsoft’s hold on business customers.

Google has long coveted the pot of gold represented by Microsoft’s business customers, those lucrative users of such applications as Outlook e-mail, Excel spreadsheets, and PowerPoint slide presentations.

In recent years, Google (GOOG) has been snapping up companies in hopes of replicating that suite of services, and it finally may be nearing a full quiver.

On July 9, Google said it is paying $625 million for security company Postini, which helps corporations and smaller businesses monitor e-mails and instant messages, encrypt information, and enforce company policies in such areas as the dissemination of confidential information. Google’s third-largest purchase after YouTube and DoubleClick, Postini is the market leader in its field, with more than 36,000 companies using its products.

The software strengthens the grouping of services known as Google Apps Premier Edition, which includes Gmail, Calendar, GoogleTalk, Docs & Spreadsheets, and Personal Start Page. Launched in February and geared toward business users, Premier Edition has acquired a following of some 100,000 small-business customers (see BusinessWeek.com, 2/12/07, “Google Steps Into Microsoft’s Office”).

A Chaser to Tonic System
And it’s adding new users at a rate of 1,000 companies a day, Google says. “We believe this will accelerate the adoption,” Dave Girouard, vice-president and general manager of Google Enterprise, said during a July 9 conference call on the acquisition. As Google’s family of business applications widens, larger businesses also may be more inclined to sample it as a means of cutting down on the number of vendors they use. Small businesses might appreciate a tool safeguarding them from security breaches and an incessant barrage of spam.

Postini is the latest in a string of deals bolstering Google Apps Premier. In April, Google acquired Tonic System, which offers online presentation software and is being incorporated into Docs & Spreadsheets, to compete mano a mano with PowerPoint. Tonic’s software also helps people collaborate on presentations and other documents online.

And on July 2, Google acquired GrandCentral, a company that lets users view and manage phone calls and messages over the Web. The technology could enhance collaboration features of Google’s applications, particularly GoogleTalk, an instant messenger that’s still relatively little used. “Now they have all the pieces,” says Sandeep Aggarwal, an analyst with Oppenheimer & Co..

A Fighting Chance Against Microsoft
Google wants to use those pieces to grab a chunk of a $12 billion market for office applications dominated by Microsoft’s (MSFT) Office.