News

Google Boosts Corporate E-Mail Service

• By The Associated Press
• October 03, 2007

The changes, to be unveiled Wednesday, mark Google's first attempt to capitalize on the technology that it picked up in its recently completed $625 million acquisition of e-mail security specialist Postini Inc.

Google also is courting Postini's existing customers as it tries to drum up more interest in a suite of online software applications that costs each user $50 annually. The roughly 36,000 businesses already using Postini products can get the software bundle, which includes word processing, spreadsheet and other programs besides e-mail, free through June 2008.

After the free trial expires, Mountain View-based Google hopes to retain many of those businesses, which include more than 11 million individual users, as customers.

To make its corporate e-mail product even more enticing, Google has boosted the storage capacity of each individual mailbox to 25 gigabytes, up from 10 gigabytes previously.

The storage capacity of individual accounts with Google's free e-mail service, known as "Gmail," will remain at just under three gigabytes.

Without providing a breakdown, Google says hundreds of thousands of businesses, government agencies and schools already use its software applications. That includes users relying on a free bundle of programs that are less sophisticated than the ones in the subscription version.

Founded in 1999, Postini provides tools that insulate e-mail from viruses and spam, recover lost data and ensure employees sending and receiving messages don't violate company policies.

Google bought Postini largely to address concerns that its corporate e-mail service lacked adequate security and compliance measures.

Gartner analyst Tom Austin said Wednesday's upgrade is a reminder of how serious Google is in its crusade to sell corporate America on the notion of using low-priced online software instead of installing programs on the hard drives of individual computers.

"These are all just pixels in a much bigger picture," Austin said. "Google is really trying to shake up the assumptions of people and move the industry to an entirely different model."

Google's expansion into business software, launched last year, looms as a threat to Microsoft Corp., which derives much of its profit from the sale of its more expensive Office suite of software applications as well as its e-mail programs.

Yahoo Inc. last month signaled its possible interest in joining the fray by announcing plans to buy e-mail service Zimbra Inc. for $350 million.

While expressing confidence that most companies will stick with its software, Microsoft also is rolling out online options to appeal to customers seeking alternatives.

Google's expansion into business software hasn't had a significant impact so far, having accounted for less than 1 percent of the company's $7.5 billion in revenue through the first half of this year.