The Big News this week is Google/Postini’s dramatic price drop for hosted email security and basic compliance services.
Every anti-spam or compliance company currently slogging it out in this competitive market will need to re-align their pricing to match what Google has done – pushed the market into a commodity status and called the industry “to the mat” to justify their much higher pricing structures. And really, why should anti-spam and basic compliance filtering cost a lot anyway? I have heard from one anti-spam vendor that currently charges a Fortune 100 company $80,000 a month, that the comparable Google/Postini pricing would be $13,000 for the same class of service. That’s a huge difference, and one which will get the attention of every IT decision maker looking to save money. Customers will start to ask their current vendors for price concessions, and some vendors who are not optimized for commodity pricing because of their high infrastructure costs will experience some pain.
Appliance and software-based anti-spam vendors will also feel the heat. With Google’s $3 per user per year pricing, the TCO tilts toward SaaS as the most economical (and perhaps reliable) way to get rid of spam. Does it really make sense these days to own and maintain a hardware appliance or software-based spam filter?
Who really knows if Google is taking a loss at these new lower prices to get more traction. They seem willing to seed the market for a long-term gain. And since Google is all about capturing as much data about everything, capturing data about spam and compliance feeds their voracious appetite for analytics.
One potential sting Google could feel is their privacy history. Will Google really resist the temptation not to analyze content information for future metrics, and eventually revenue? Competitors could force Google to “prove” there is no content leakage between the spam filtering side of the business and the search business.
