Google's New Pricing Approach For Cloud Storage

Most online e-mail archive providers charge by the byte, Google goes subscription.

By Judy Mottl | Posted Apr 14, 2008
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There are more than a few storage-in-the-cloud services today and more cropping up, but while Google's Message Discovery service isn't alone in the sandbox, it's one of the few not basing revenue on how many bytes are crammed into its cloud.

The e-mail archive and e-discovery offering, initially released in February, is now an online service. It features security technology acquired through Google's $625 million purchase last July of Postini.

Postini is an on-demand provider of software and services to encrypt, archive and enforce policies for e-mail, and other Web-based communications. The hosted package, which is included within the Google Apps Premier Edition, supports Exchange and Lotus Domino as well as Gmail.

When it comes to online data storage, vendor tools are very similar, according to research firm Enterprise Strategy Group (ESG) and most charge based on data loads -- the more data stored, the more cost to the enterprise.

With Message Delivery the cost is an annual subscription fee of $25 per user per year. That distinction, according to ESG, could become a standard as pricing is a differentiating factor among vendors.

"Google's offering is not unique from the standpoint of message archiving and discovery as there are many other service providers that have had these capabilities for while," Brian Babineau, senior analyst in the ESG told InternetNews.com.

"However, Google is being fairly aggressive on its pricing and it needs to leverage message security services and mega-brand to successfully compete. I, for one, would not bet against the brand," he said.

The Google cloud initiative follows several other brand name vendor moves into e-mail archiving. This past February Dell bought MessageOne, an on-demand e-mail archive and disaster recovery vendor for $155 million. Yahoo spent $350 last September for Zimbra, a provider of e-mail and collaboration software.

Storage in the cloud is catching on for several reasons. Enterprises find tape drives and e-mail servers often become too costly and too complex to manage.

The overriding concern however, is security, and that issue was the primary driver for the Postini acquisition, according to Adam Swidler, product marketing manager for Google Enterprises. The Postini software encrypts, archives and enforces policies for e-mail, instant messaging and other Web-based communications.

"Two to three years ago it was a difficult conversation to convince business to route their e-mail into a cloud. But our patented architecture with Postini security have passed the litmus test for customers," Swidler told InternetNews.com.

Given the 40,000 business customers and 14 million end users using Postini software there's clearly a ripe marketplace for Google's storage service. While Google said it can't provide subscription figures, it said adoption is happening over a "very broad demographic segment."

"We are seeing tremendous response and we think it's partly tied to how we're selling it," said Swidler, noting that the typical cost approach involving volume discounts, number of seats and amount of data archive load is very confusing for businesses to understand.

"With a one-price subscription enterprises can clearly determine the return on investment and cost efficiency of this service versus using hardware and all the collateral costs that come with that," he added.

Article courtesy of InternetNews.com

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