Google is beefing up security to take a bite out of the online business services market.he Web's No. 1 search company on Monday said it will pay $625 million in cash to acquire Postini, which sells security software for companies' e-mail, instant messaging and other Web-based communications. The purchase is expected to close by the end of September.Google GOOG executives say the deal will help it move further into business services such as e-mail, instant messaging, online calendar services and online productivity software.

"We are fundamentally here today because we believe that this is a business that Google should be in," said Dave Girouard, vice president and general manager of Google Enterprise during a conference call Monday. "It really does reaffirm our commitment to delivering hosted applications to businesses."With Postini's security, companies might think more seriously about Google as a business service provider, says Rebecca Wettemann, vice president of research for market tracker Nucleus Research."Google would argue that they have a more secure data center than most internal IT departments running e-mail, but they recognized that (a lack of security) was the perception that people had," she said. "This gives them a clear set of tools to address security and liability within the enterprise messaging environment."

Google says more than 100,000 businesses use its applications services and more than 1,000 small businesses are signing up daily.The deal shows that Google is targeting large businesses looking for online security services, says Citi-bank analyst Mark Mahaney."Google is clearly positioning itself as an on-demand/software-as-service enterprise provider," he wrote in a research report. "We would expect more from Google in this sector going forward, including more acquisitions."With Postini, Google will now compete with other Web security service rivals including Symantec (NASDAQ:SYMC) SYMC, McAfee MFE and Websense WBSN.

But Google's latest acquisition won't come without challenges.The company makes nearly all of its money from selling text-based ads posted alongside search results.Therein lies the rub, wrote Youssef Squali, analyst for Jefferies & Co. in a report on Monday."One of the challenges for Google is to manage a free, ad-driven business model, which it built around the majority of its corporate offerings to date, and Postini's paid model," he wrote.Though small, Postini appears to be growing fast. The San Carlos, Calif., company serves more than 35,000 customers. Squali expects its sales to jump 40% this year to around $90 million.