John Katsaros

iPad Envy - - and HP?

While the swine flu epidemic was more or less a bust, iPad Envy has hit Silicon Valley in a big way. Lots of people want one but corporate affiliation may mean that if you get one you might have to keep yours in the closet. If you bought and boasted about your new Kindle in 2009, then buy one of those iPad book covers to conceal it — we don't want to hear how much you love it. If you work for any one of a long list of companies including Intel, Google and Microsoft then you can't take your iPad to work. Probably the worst case of iPad Envy may be HP which on Wednesday said it would pay $1.2 Billion to acquire Palm and subsequently went on to say that Palm's webOS was a key dealmaker cause HP needed an OS for building things like ...iPads. Since we don't know the details it's hard to say whether this will be a success or not and there seems to be a lot of value in the Palm patent portfolio. An argument can be made that HP could have been a stronger player in the mobile market if it was device agnostic and treated things like smart phones and tablets like disposable devices. However, with this acquisition we're past that point. You've got to wonder why HP would want to take on a competitor like Apple. HP's enemies list is pretty big — longstanding were IBM and Dell. More recently Cisco. Now add Apple and Google into that mix and you end up fighting battles on too many fronts. With regard to Palm, one of our readers who shall remain nameless sent in this final advice learned from the Palm debacle — for heaven's sake, don't call your hot new product the "Pixi." Blackberry, iPhone, Danger, Android — all OK names. But Pixi? That's a mistake you can't recover from.

Speed Matters — Still

In mid April, Google mentioned in a blog posting that it has added a new signal in its search ranking algorithm — site speed. The faster a site responds the higher the ranking. Google says that site speed doesn't carry much weight so fewer than 1% of search queries are affected by this change. Nevertheless it's now official — if you care about your Google site ranking — then you should care about your speed. Interestingly, embedded in the Google material was a reference to Shopzilla's findings that their five second speed improvement resulted in a 50% reduction in hardware. That sounds high but it does make a helpful point.

Buzz Continues

There is still plenty of buzz around last month's acquisition of Postini by Google.  It's hard to believe that this is the only step that Google will make with regards to pushing itself into the enterprise e-mail space and it may be the biggest challenger that Microsoft's Exchange system has seen in awhile -- at least since the "good old days" when Microsoft became dominant in the e-mail sector after beating up on IBM/Lotus.  If you're of the camp that the proverbial other shoe(s) are yet to drop, then what will it (or they) be?  But the conversion to Exchange 2007 may be harder on customers than expected and may cause customers to sit tight or seek alternatives.  There are lots more functionality in the e-mail ecosystem which may make for interesting Google acquisition targets and, when you think of it, your e-mail system is such an important part of your workday (as well as being a repository for your long term memory), there are lots of valuable spaces for Google to expand into.  Or will Google instead go horizontally and push Postini's efforts in the "clean pipes" area to protect Web browsing.  With Google's money they can do both.

Postini Rings the Bell

In a blockbuster deal announced in early July, Google announced its plans to acquire Postini for $625M in cash. Postini has always has been an innovator in the email managed services market, despite its two near death business experiences. In its conference call, Google cited Postini's 35K customer base and its scalable architecture as the reasons behind the acquisition. But Google says it already has 100K business customers (1K small businesses signing up for its hosted solutions each day) including 100's of universities. It takes a lot of channel relationships to maintain market share in the email managed services marketplace, something new for Google. Is this a case where Google actually wants to break into this market (in which case there's a lot that may change with its "go to market" strategy) or is the Postini acquisition a way to gain significant differentiation as it brings new hosted business services to market? Or, better yet, an ad-supported anti-spam service -- boy, if that ain't an Internet Oxymoron ...

Anti-Spam Hall of Fame

Date	Acquiree	Acquirer	Amount	Estimated Sales Multiple
3/04	Corvigo	Tumbleweed	$38.5M	?
6/04	Brightmail	Symantec	$370M	7x
7/04	TurnTide	Symantec	$31M	?
7/05	FrontBridge	Microsoft	???	???
2/06	MailFrontier	SonicWall	$31M	?
7/06	BlackSpider	SurfControl	$38M	5x
7/06	CipherTrust	Secure Computing	$279M	3.7x
1/07	IronPort	Cisco	$830M	8x
7/07	Postini	Google	$625M	7-11x?
Total			$2.24+B

Got Them e-mail Blues

It wasn't surprising to hear the rumor about e-mail server provider Mirapoint's layoff of 50 employees on the same day that Google announced its corporate communications tools (e-mail, IM and calendaring) service offerings.  An argument that's often made by the nine or ten e-mail server companies is that they'll beat Microsoft's Exchange in the "mail for the masses" market -- when, for instance, retailers decide they need to provide e-mail accounts for their huge workforces and don't want to pay the high price for Exchange.  We've always said that this was a weak proposition since the Googles of the world can quickly move in and monetize this space by providing better functionality at no cost supported through advertising.  And that's starting to happen with Google's announcement.  Mirapoint was probably the first of the bunch to feel the impact since its business is heavily skewed toward the education market, a likely first target market for Google's new service offerings.  Google's free 2GByte mail box service for the entire student body is a difficult offer for a budget restricted educational institution to turn down when compared to spending heavily to buy and operate an e-mail infrastructure.