Tag Archives: margins

Google pimps out Postini

Google announced new pricing for its Postini security products on Tuesday, essentially chopping per-user costs from $30 per user per year to as low as $3. >Read Article

Here we go again. Another example of short-term greed killing the market for the rest of us. Google’s most recent gobble, Postini, is planning to drop their drawers on enduser pricing for service-based filtering, av, and content policy enforcement across the boards. Yet another classic example of buying the market in an attempt to pump up contract sales. But at what cost to the rest of us in the biz?

The 90s were a heydey for networking hardware. SynOptics/Bay Networks was selling 8-port 10BASE-T hubs for $800 list. Routers and switches, depending upon their configuration options were going for $20-50k. Oh, happy day! The fax machine rang all day long with $300,000 purchase orders. Channel margins were up, basic installation services went for $150+ per hour. It was raining money and everybody was soaking it all in.

But the market began to get crowded. Small players like D-Link came upon the scene. Next thing you know, margins start dropping like a rock. A few short years later, that same 8-port hub wasn’t even valuable enough to serve as a cereal box prize. I’m simplfying a bit, of course, but I see some parallels with the hw market that are beginning to take hold in security.

The security market is more crowded than a rolling paper booth at Burning Man.  This offers endusers more options, which is good, but it can also be dangerous — especially when it leads to price wars. Unbalanced pricing is just as dangerous for buyers in the long-term as it is for vendors. After all, competitive pricing pressure can lead to lower quality products, fewer innovative features, and product EOL (end of life) due to the market death of a vendor. As the little guys die off, the customer is eventually forced to make vendor choices based upon the lesser of evils (Google or Microsoft). Ultimately price wars can also lead to job market collapses and negative impact upon local economies. And, no, I’m not just being paranoid.

Oh, golly. I could keep going on this rant. It comes down to this: Google is lame.

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Filed under Pricing, Rants