Is Google’s Enterprise Software Too Cheap?

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By Saul Hansell

When Google purchased Postini last year for $625 million, it was making a big commitment to the enterprise software business. But not surprisingly, Google isn’t committing itself to business as usual. And it is causing a little heat among Postini’s existing partners.

Google’s biggest sin: Slashing prices by as much as 90 percent.

Postini offers services to corporate data centers that filter spam and monitor e-mail. Previously, Postini’s services cost between $30 and $100 per year per user. Google’s new price schedule now ranges from $3 to $25 per year.

That’s great news for customers, of course. But it is a disaster for the independent companies that have been selling Postini’s system. EWeek’s Channel Insider wrote that the changes “left partners reeling and searching for more channel-friendly vendors for their customers’ e-mail security needs.”

Google also now wants to handle service directly for all but the smallest customers, taking the independent sales companies out of the loop.

EWeek quoted an anonymous Postini reseller based in California saying:

We want to drive value to our customers and we don’t think that providing support through a call center that Google maintains is the best way. I don’t see where the customers are going to gain much. Google is taking away the ability of the solution provider to support our clients.

The best way to look at Google is as a company devoted to building very low cost applications that take advantage of its huge data centers. Search is the first, and probably the best, of these. But its move into productivity applications is another. Clearly, the company will be able to give Microsoft a run for its money selling word processors and such to individuals and small businesses.

But enterprise customers want their hands held. And if you cut prices too low, there simply isn’t enough money for Google or a reseller to provide much service. It will be very interesting to see if the market demands that Google actually raise its prices in order to compete.

Enterprises want software and solutions that just work. Barring that, they want their hand held. If Google can automate setup and maintenance functions that otherwise would require “value added” services and support, and if they can do it efficiently and effectively, then the loss of the resellers is mitigated for customers. Google is probably not keen in acquiring or developing software that can’t be automated over the long haul. Whether Postini’s offerings are designed well enough to obviate the need for partners is another story.

†Posted by Kawika Holbrook

The support information is all wrong and those resellers know it. In reality, Google has added more value to the service part than before.

Those resellers need to understand the new program and not sound off in such knee jerk reactions.

Think about the last paragraph for a moment…, that’s it, keep thinking… Yes, now you get it!

†Posted by Postini Partner

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