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posted on 18 March 2008 17:15

LONDON, UK, March 18 2008 — The market for hosted e-mail mailboxes is poised for rapid growth due to the economics of cloud computing and the entry of new vendors, according to Gartner Inc.

Analysts said that the move to a hosted-delivery model will change the face of IT architectures over the next decade and that e-mail will be at the forefront of this change.

"After a decade of treading water, a market that had been the province of small suppliers has been rapidly transformed into a market where the largest IT companies are aggressively competing," said Matt Cain, research vice president at Gartner. "The kinds of economies of scale that the likes of Microsoft, Yahoo and Google can offer with their tens and hundreds of millions of users will send e-mail prices plummeting over the next few years."

Gartner predicts that by 2012, hosters will offer organisations with generic mail and calendar needs the opportunity to make significant savings on total e-mail operating costs with prices set to fall from the current average of $10 per user per month to $2 per user per month.

Mr. Cain said that the demand for e-mail storage will also create demand for hosted services. "Most organisations currently cap mailboxes at around 200MB and allow the creation of local archives to accommodate needs for more storage. However, many organisations would like to move away from local archives and would be attracted to a more cost-effective hosting model, where one-gigabyte mail stores are now the starting point," Mr. Cain said.

The uptake of hosted e-mail will start with small companies, move through midsize companies and finally become an appealing model to the largest organisations (more than 50,000 seats) by 2012. "Hosted economics are more appealing to smaller companies, which pay more per seat for e-mail services when deploying on premises and tend to have fewer customisation needs," explained Mr. Cain. "Conversely, large organisations already have lower operational costs and have more-extensive needs for custom e-mail services, such as compliance and disaster recovery."

Microsoft and Google are already using the education community as a testing ground for their push into hosted enterprise e-mail, both offering no-fee services for students, staff and faculty. Microsoft recently extended its no-fee service to Exchange for students, which will be run on the hosted platform while staff and faculty use the on-premises version of Exchange. Gartner believes that this hybrid model (on-premises and hosted) will become increasingly popular for enterprises — whereby certain populations of users (those without extensive e-mail and calendar needs) will use Outlook Web Access (OWA) "in the cloud" at a low price point, while the company maintains a population of Outlook/Exchange users at headquarters.

"E-mail is only the starting point for a vast move to hosted services," Mr. Cain said. "Hosting vendors will bundle instant messaging, presence and teamware services along with e-mail. E-mail will also be increasingly tied to social software tools, enabling the automatic insertion of social data into messages from previously networked senders, providing another competitive advantage to larger vendors which straddle the consumer/corporate continuum, such as Google, Microsoft and Yahoo."

Additional information is available in the Gartner report "E-mail Hosting: Poised for Explosive Growth." The report is available on Gartner's Web site at http://www.gartner.com/DisplayDocument?ref=g_search&id=609007&subref=simplesearch.

About Gartner
Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the indispensable partner to 60,000 clients in 10,000 distinct organisations. Through the resources of Gartner Research, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyse and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 3,900 associates, including 1,200 research analysts and consultants in 75 countries. For more information, visit www.gartner.com.

^{[Formatted by Majid Soltani.]}