* The big news about the the hosted services Google announced last week
Google announced three hosted services last week. These are all services that Postini, which Google acquired last year, has been providing for years. However, the big news is Google’s pricing model.
Google announced three hosted services last week:
* Message Filtering: Inbound message filtering, including antivirus and antispam protection.
* Message Security: More sophisticated message filtering, plus outbound e-mail management, encryption, attachment management and other services (Compare Messaging Security products).
* Message Discovery: All of the above plus e-mail archiving (Compare Message Archiving products).
These are all services that Postini, which Google acquired last year, has been providing for years. However, the big news is Google’s pricing model. Message Filtering is priced at just 25 cents per user per month starting for a single user. Message Security is $1.00 per month, and Message Discovery is $2.08 per month. Additional unlimited archiving storage is priced at $0.83 per month per year of storage.
This clearly represents a significant downward shift in prices for these types of services compared to most of Google’s competition. Here’s the impact I think it will have on the Software-as-a-Service (SaaS) market:
* In the near term, we’re likely to see significant price drops by some of Google’s competition. This will certainly squeeze margins for these providers, but Google’s pricing structure will simply be too tempting for many potential customers to resist. Some providers will have to drop prices simply to retain many of their customers.
* While Postini has successfully been serving large enterprises, the new offering seems aimed primarily at the lower end of the SMB market. This makes sense given the fact that there are millions of potential customers in this market segment, and it will grow the market for Google Apps, Google’s productivity suite. This will likely push many of Google’s messaging security and archiving competitors into a focus on the upper end of the SMB market and into the enterprise space.
* Given that many of Google’s SaaS competitors will focus more on larger SMBs and enterprises because of the greater profit margins these customers can generate, we’re likely to see faster adoption of SaaS into larger organizations than we otherwise might have seen.
In short, I think one of the key impacts of the Google announcement will be to expand the base of SaaS customers at the low end, given that the pricing of these services is now lower than it has ever been; and it will drive new growth among larger organizations as Google’s competitors are driven upmarket.
I’d like to know what you think about this – please send me an e-mail with your thoughts.
