Exchange 2007 aka 'The One That Got the Biggest Market Share'
Well-made and highly popular, if Microsoft Exchange were a TV show, it would undoubtedly be Friends, and Exchange Server 2007 would be an episode called "The One That Got the Biggest Market Share." The Redmond giant's latest iteration of its e-mail platform is expected to win a great many customers mainly at the expense of IBM's Domino and Novell's GroupWise. The catch, however, is that future versions of Exchange are unlikely to be as successful.
|With Exchange 2007, Microsoft is redefining what constitutes an e-mail platform and expanding its reach. In return, it anticipates commensurate growth of its customer base.|
That's certainly the opinion of Matt Cain, lead e-mail analyst at Gartner. "We forecast that Microsoft will get 70 percent of the commercial e-mail market by 2010. That will be the high point, and Microsoft's market share will decline after that," he said.
Who will be taking market share away from Microsoft at the end of the decade? Not IBM or Novell, Cain believes. Serious competition is more likely to come from new vendors (such as Zimbra) whose current offerings will be mature enough in three years to be viable alternatives to Exchange for many organizations.
Competition will come from another source as well. "The biggest threat to the Microsoft Exchange franchise will be software as a service. In three years time, Google's e-mail platform will have become mature and competitive, and will also pose a serious threat," Cain said.
For what is essentially an e-mail product, it's ironic that the major attractions of Exchange 2007 are not directly e-mail related. Although the new product includes improvements to the management layer, higher availability and improved storage options, the biggest change is that Microsoft has expanded the definition of what is an e-mail platform. "Really what Microsoft has done is turn Exchange into a unified messaging platform," says Cain.
Two key new attractions are the addition of voice mail capabilities and integration with the voice components of Office Communications Server. Although it has been possible for a while to integrate voice messaging into Exchange using third-party software, Microsoft has effectively brought this capability in-house.
"I think that Microsoft has looked at third-party activities around Exchange and decided to add those elements. E-mail access to voice mail has been stubbornly fixed at around the 15 percent mark, but there's no question that where it's made available it's tremendously popular with end users. The day most people get voice messages on e-mail tends to be the last time they use their voice mail system," says Cain.
Thus, such integration will likely be popular with organizations lacking a voice mail system or those looking to replace their voice systems.
Microsoft is also pushing ahead with its strategy to move more seriously into mobile solutions. Exchange 2007's Direct Push e-mail, combined with Windows Mobile 6 devices which are just starting to appear will likely challenge the hegemony of RIM's Blackberry devices in the longer term.
Thanks to Microsoft's acquisition of FrontBridge Technologies in 2005, Microsoft is now also involving itself in anti-spam and anti-virus systems, archiving and compliance (from FrontBridge's SEC 17a-3and 17a-4 compliance service, which it acquired from MessageRite), and disaster recovery (via FrontBridge's mail-spooling and mailbox-mirroring technology). This puts it in direct competition with companies like Trend Micro, Symantec and IronPort on the antivirus and anti-spam side, and Computer Associates, EMC and Double-Take on the archiving, compliance and disaster recovery fronts.
Why is Microsoft involving itself in these areas? The answer, according to Cain, is that its Exchange business has a target growth rate of 15 percent to 18 percent annually. With the e-mail market growing at around 10 percent per year and conversions from Novell's GroupWise and IBM's Domino coming steadily but slowly, Microsoft has no choice but to encroach on satellite businesses to achieve its targets. A big question is how successful it will be in these areas.
"Take e-mail hygiene for example. I think Microsoft's offerings will be adequate, but I doubt people have the confidence to turn over their anti-spam or anti-virus to Microsoft quite yet," Cain said.
Whether Exchange 2007 really achieves 70 percent market share in three years remains to be seen. So far, few businesses have implemented Exchange Server 2007 probably less than 300,000 seats in all, according to Garter's estimates. These numbers should pick up sharply with the release of Service Pack 1, which will introduce new functionality, such as access to public folders using Outlook Web Access.
Released as a Beta in April, Service Pack 1 is expected to be go gold in the second half of this year, at the same time as Longhorn.
The e-mail market is likely to look dramatically different in four of five years time when the new breed of open source-based products and hosted services have had time to get their acts together more effectively. Once this happens, it's unlikely Microsoft or anyone else will be able to dominate the market to such an extent ever again.