Google announced today that it is buying Postini for $625 million. Postini makes security software for e-mail and other enterprise communications applications. It is Web-based, hosted software, just like Google Apps. Google (GOOG) wants Postini to make its hosted Google Apps (Gmail, Calendar, Docs & Spreadsheets) more appealing to businesses. So far, more than 100,000 businesses have signed up for Google Apps, but security concerns are obviously holding back adoption from bigger companies. Dave Girouard, the vice president in charge of Google Enterprise explains:
The response to Google Apps has been tremendous, with more than 1,000 small businesses signing up for the service every day. At the same time, large businesses have been reluctant to move to hosted applications due to issues of security and corporate compliance.
The size of this deal (it's the third largest for Google after DoubleClick and YouTube) indicates how serious Google is about going after Microsoft's (MSFT) sweet spot—productivity apps for business customers.