MarketScope for Email Systems

Selecting an email system used to come down to choosing a vendor and version, but cloud email now creates a new strategic question: do we run email on-site or in the cloud?

Even though cloud email makes up less than 10% of the overall market for enterprise email, its impact has been profound. Business people are increasingly comparing their consumer email experience to enterprise email deployments and they are becoming impatient with small mailboxes, limited mobile options, unreliable uptime and older versions of the client and server software. Cloud email has created a new level of accountability for in-house email. However, the decision to move mail to the cloud requires substantial analysis with a particular focus on economics, security, manageability and contract terms.

As well as grappling with cloud email, over the past 12 months we also saw several high-level email trends, for example:

• Continued uptake of Exchange Active Sync for delivering mobile mail services to iOS and Android devices, to the detriment of Research In Motion (RIM).
• Strong use of non-Outlook clients to access Exchange email (via ActiveSync and Exchange Web Services) creating the potential for displacement of the Microsoft email client.
• Increased uptake for "no-fee" cloud email services in the ".edu" market, including adoption by staff and faculty, not just students.
• Strong uptake for cloud email by government entities such as local, state and large federal agencies.
• Ongoing struggles with email retention issues, such as what to keep and what and when to purge messages.
• Intensifying debate over the role of email vs. other technologies, such as social and real time communications.
• A consistent struggle to overcome persistent email overload.

Over the next 12 months, we anticipate that these five topics will continue to dominate email discussions, which will also include debate over the merits of the next version of Microsoft Exchange, which should come out in early 2013, assuming Microsoft sticks to its standard three-year release cycle.

In general, we have observed a narrowing of purchase decisions for enterprise email systems. Increasingly, buyers are tapering their choices down to Google or Microsoft and if the preference is for Microsoft, then the debate focuses on the deployment model — cloud vs. on-premises. If the choice is cloud, then the debate is around what type of cloud (dedicated or multitenant) and what type of hosting provider to use — a strategic outsourcer, Microsoft or a small cloud services supplier.

Market/Market Segment Description

This analysis addresses email systems, which at the most basic level are composed of three elements; a message store, a directory and a message transport mechanism. Email systems also typically include calendar services and an email reader (client), but not in all cases. Here, we cover both cloud and on-site email services. For Microsoft, we include ratings on both the on-premises and cloud version of Exchange.

Inclusion and Exclusion Criteria

There are more than 20 email vendors in the enterprise market worldwide, making it difficult to evaluate all participants. In selecting vendors to participate in this comparative analysis, we identified the seven vendors most frequently asked about in our calls with clients. The primary focus is on vendors that sell to the enterprise and government markets. We excluded vendors that focus exclusively on ISP or communications service provider (CSP) markets, such as Openwave and Oracle (with its Sun Java System Messenger Server). Oracle's Beehive is not included because there has been no sign of its success in the enterprise email market.

Given fierce competition for this enterprise market space, some vendors (such as Open-Xchange and Critical Path/Mirapoint) are increasingly pursuing opportunities in the ISP/CSP market and as a result, get lower ratings here, given our focus on the enterprise. We have dropped Xandros/Scalix from the evaluation this year, since enterprise interest in the product has fallen and there appears to be no active marketing around the product.

Rating for Overall Market/Market Segment

Overall Market Rating: Strong Positive

Email/calendar systems are the most business-critical communication channel for enterprises and deliver a reliable, cost-effective and secure mechanism for collaboration.

Evaluation Criteria

Source: Gartner (August 2012)

Source: Gartner (August 2012)

Vendor Product/Service Analysis

Critical Path

In 2010, Critical Path acquired Mirapoint, a long-standing participant in Gartner's email MarketScope analysis. Critical Path (now known as CP) has been focused on the large CSP and operator market for a long time, while Mirapoint had more focus on enterprise and midsize CSPs. However, the two companies moved to a combined code stream and now offer email, email security and mobility services via appliances, software and cloud provisioning models.

CP targets the enterprise market mostly with appliances and planned to release a new version of its Razorgate email security appliance in July 2012, which uses tarpitting (a service that slows suspected spam delivery), clustering and outbound spam detection, all inherited from CP. The company plans to release Mirapoint Messaging Series 8 in October 2012, which includes CP-supplied clustering, reporting and single-seat administration across multiple units.

In the enterprise market, CP is targeting companies that want to deliver email (along with voice mail, instant message and video) to employees not yet provisioned with email. In the CSP market, CP sees an opportunity for growth, based on strong demand from emerging nations such as Brazil, Russia, India and China (usually referred to as BRIC), as well as opportunities created by the recent sale of OpenWave and Nokia's operator-branded messaging business (to Marlin Equity and Synchronica, respectively).

In February 2012, CP bought Laszlo Systems, which enables organizations to combine a variety of legacy and Web-based applications into a common user interface, with drag and drop capability between the diverse applications. The so-called Webtop technology will be aimed at CSPs and other operators for customized consumer and small business portals, as well as for enterprise B2B portals.

Rating: Promising

Google

Google continues to exceed expectations in the enterprise email market, with successful roll outs of larger deployments, as well as entry into critical market verticals such as banking (BBVA 110,000 seats), insurance (Sompo 30,000 seats) and big pharmaceuticals (Roche with 90,000) seats.

The appeal of Google Apps for Business is in its simple licensing ($50 per user, per year), its wide range of services (Gmail is joined by chat, personal productivity applications and shared workspaces), its consumer appeal (Gmail is the one of the largest consumer email services) and a steady stream of innovative improvements (such as priority sender, its Google Drive file sharing service and automatic message translation).

Google continues to do well in government (U.S. Department of Interior [88,000 seats] and in Maryland, Wyoming, Colorado and Utah). On the security front, it earned ISO 27001 certification in May 2012. It's challenge moving forward will be to expand Google Apps for Business to include enterprise-grade versions of the Google+ social platform and Google Voice telephony service.

In 2012, Google jettisoned several services that came with the acquisition of cloud malware protection vendor Postini. In January, it stopped selling the email continuity service for on-premises email, and in May it replaced the email archive service with an in-house developed Google Apps Vault archive service. We continue to hear from customers that Google is resistant to enterprise requirements (particularly around change management), that its sales force can be difficult to engage and its technical support cumbersome.

Rating: Positive

IBM

We believe that IBM is no longer strategically focused on the battle with Microsoft for on-premises email business. Its focus is on cloud email and the more lucrative integration business with its Social Business practice. IBM, for example, will introduce a new email interface in late 2012, that will enable users to access Domino or Microsoft Exchange messages from the Connections social platform. IBM says Connections Mail will prioritize messages and leverage social analytics, so that instead of an inbox concept, only relevant email is displayed to users at any given time.

IBM's strategic refocusing does not mean that it is walking away from all aspects of the Notes/Domino business and sustaining existing customers' Notes/Domino investments is very important to IBM. We believe that despite losing email business (primarily to Microsoft, as well as Google), IBM maintenance revenue for Notes/Domino is substantial. The number of organizations successfully exiting the Notes/Domino platform completely in the short term is quite low because of the presence of Domino applications. Consequently, IBM continues to invest in Notes/Domino.

In late 2012, for example, we are anticipating a version update (8.5.4), branded as a Notes/Domino Social Edition that enables users (via Open Social 2.0 and Apache Shindig) to access surveys, workflow approvals and YouTube videos inside the message. There will be no need to open a new window, container or browser. Security Assertion Markup (SAML) support for browser single-sign on will be added to the server. Web and mobile support will be improved and delivered with new email and calendar features (a major release which IBM says is likely to be called version 9) is anticipated in late 2013, focusing on mobile and Web interfaces, as well as inclusion of operational elements from its cloud service for Notes/Domino. We have not yet seen much client interest in this cloud service, which was renamed Smart Cloud for Social Business (previously named LotusLive).

Rating: Positive

Microsoft Exchange (On-Premises)

Microsoft continues to do well in the on-premises market and there is a significant and prolonged interest in organizations moving from Novell Groupwise and IBM Lotus Notes/Domino to Exchange. As well as Google, Microsoft's primary competitor is older versions of Exchange, as many organizations bypass Exchange releases.

Microsoft is coming to the tail end of the new sales life cycle with Exchange 2010. Introduced in November 2009, we expect it to be replaced by the next major version in early 2013. However, new deployments of Exchange 2010, will continue throughout 2013 because most customers are wary of being early implementers of a new Exchange version. Exchange 2010 deployments, we believe, will peak at about 55% of the overall base, with most Exchange 2003 shops converting to 2010.

The primary migration scenario for the next version of Exchange will be from Exchange 2007. We expect the next version to continue many of the themes of Exchange 2010, such as better storage efficiencies, more archival and compliance options, simplified operations and improved mobile support. On-premises Exchange continues to be the provisioning model of choice for organizations with extensive needs for customization, security, message control and distributed topologies.

Rating: Strong Positive

Microsoft Exchange (Online)

Microsoft released its second-generation cloud email service (the Exchange Online component of Office 365) in June 2011 and the level of interest in this product is unprecedented. Most organizations are willing to consider a cloud deployment of Exchange and Microsoft's sales force has been successful in getting many organizations to take a closer look.

Organizations see Exchange Online as a way to generally improve uptime and continuity, deliver more mobility features and larger mailboxes and reduce the number of personnel managing email (particularly those companies on older versions of the service). Many of these benefits, of course, can be delivered with an on-site upgrade to Exchange 2010, but executive management appears more willing to fund a move to the cloud rather than in-place upgrades.

However, Exchange Online is relatively new and our view is that not all the kinks in the service have been worked out. Customers, for example, tell us that problem escalation can be sluggish and complex problem resolution can be challenging. Some organizations have had difficulty with the onboarding and migration process. However, once the migration is complete, Exchange Online generally works as advertised and organizations are glad they made the switch. These problem resolution and migration difficulties, which Microsoft says it is addressing, prevent a strong positive rating.

The core challenge for Microsoft over the next 12 months will be to successfully transition Exchange Online to the next version of Exchange, anticipated in early 2013. It took Microsoft more than 18 months before it got Exchange 2010 into mainstream cloud deployment, but it says that the new version of Exchange will be available in the cloud at the same time (or sooner) than it is available for on-site deployment. It will also need to provide an easy update process from Exchange Online to the new version. Migrations from Business Productivity Online Standard Suite to Exchange Online have been very labor intensive for some organizations.

Rating: Positive

Novell

Prior to its acquisition by The Attachmate Group in April 2011, Novell's GroupWise market share was in steady decline as the user community migrated primarily to Microsoft Exchange. We continue to see erosion of the installed base, but Novell has taken several actions which it anticipates will stem further loss. GroupWise, for example, is now being sold by the entire Novell sales force (representing more than a tenfold increase in the number of trained sales executives) and it initiated an expansive campaign to visit GroupWise customers and solicit feedback on product direction. Furthermore, Novell says it increased the number of engineers working on the product by one third and has offered upgrade assistance to customers looking to move to the latest release.

The company reinstituted a focus on GroupWise at its annual BrainShare conference, ran marketing events in approximately 50 large cities and initiated targeted advertising. The company says it has also accelerated product development for GroupWise and adjacent products such as Vibe (team collaboration and social), Data Synchronizer (mobile synchronization) and Messenger (instant messaging).

Specific to email, in January 2012 the company released GroupWise 2012, which includes better integration with Vibe, better Web access, templates for iPads and integration with Skype. In early 2013 the company anticipates a follow on to GroupWise 2012, which will add long-requested elements, such as Active Directory integration and Web administration.

Rating: Promising

Open-Xchange

Open-Xchange has its headquarters in Germany and is focused on an indirect, software as a service email model, with service provider and software OEM sales prioritized over direct enterprise sales. The company enables service providers to continue to operate their existing back-end email infrastructure while they move users to the Open-Xchange Web client. Service providers can then upsell customers with Open-Xchange mobile, social and Outlook integration services — all running against the back-end legacy email infrastructure.

Open-Xchange is integrated with both the cPanel and Parallels platforms providing billing, tenant management, upgrade and support services. Its single largest customer is German Web hosting giant 1&1. According to the company, wins over the past 12 months include The Endurance Group, Strato, Europe's second-largest Web host and services provider, NetCologne, a German telecommunication/ISP in Germany and one of Spain's largest Web hosting companies (now a part of Telefonica).

Open-Xchange says it is seeing traction in the telecom, mobile and cable industries, as well as very large distributors and system integrators such as Bull. A partnership with Openwave, whereby Open-Xchange supplies the user interface for the Rich Mail 4 product, provides access to 150 million Openwave email seats deployed at companies like Time Warner Cable, NTT Docomo and UPC. In the future, Open-Xchange will focus on its next-generation Web-based software for home and small office environments, as well as its tablet clients.

Rating: Promising

VMware/Zimbra

VMware started its foray into the collaboration market with the purchase of Zimbra in 2010. In 2011, the collaboration portfolio was expanded with the purchase of SlideRocket (for collaborative presentations) and Socialcast (for enterprise social networks). VMware is also developing a premises and cloud-based file sharing service which is expected to be released in 2H12.

The company is assembling a compelling suite of collaboration products underpinned by its Horizon identity and access management service, which — with proper execution — has the potential to emerge as a strong third player (along with Google and Microsoft) in the collaboration suite market. However, the two missing elements are a strong cloud platform (delivered by either third parties or by VMware) and a real time collaboration stack (instant messaging, voice and Web/video conferencing).

For now, VMware is integrating with Cisco (Unity, Webex and Jabber) and Mitel real time services. The company has ambitious plans for Zimbra, which, at this time, we rarely see in the enterprise space. Version 8 (due in 2H12) will focus on advanced browser-based access with a smarter inbox via expanded search and new sorting, filtering and threading capabilities.

Zimbra will continue to offer its own offline client, but will transition to HTML5 offline capabilities in the future. Longer term, Zimbra will replace MAPI support for Outlook with Exchange Web Services for better Outlook support. Among the administration features in Zimbra 8 will be improved high availability and continuity options delivered with vSphere and the Zimbra appliance.

Rating: Positive