Microsoft and Google Fight Over E-Mail, but Agree on $5 Inboxes

When it comes to cloud-based e-mail, there are four major vendors vying for your IT dollars: Microsoft, Google, IBM and Cisco. Each has its pros and cons, but no matter which vendor you choose the price of e-mail will be roughly the same: $5 per user per month.

By Jon Brodkin
Mon, August 16, 2010

Network World — When it comes to cloud-based e-mail, there are four major vendors vying for your IT dollars: Microsoft, Google (GOOG), IBM (IBM) and Cisco. Each has its pros and cons, but no matter which vendor you choose the price of e-mail will be roughly the same: $5 per user per month.

E-Mail Technology Definition and Solutions
E-Mail Management Definition and Solutions

Google singlehandedly "repriced the business e-mail market" when it launched Google Apps Premier Edition in February 2007, with $50 annual subscriptions (or $4.17 monthly) that "undercut the market price for e-mail by a factor of two or three," says a new report by Forrester Research analyst Ted Schadler.

Google Apps vs. Microsoft Office

Microsoft (MSFT) followed suit in late 2009 by lowering the price of hosted Exchange seats from $10 to $5 per month. IBM's LotusLive e-mail and Cisco's WebEx mail now offer similar pricing, in effect standardizing the whole market on price at about $5 per mailbox per month, with typically about 25GB of storage.

"Cloud e-mail vendors have reached price parity," Schadler writes in the report Four Giants Compete for your Cloud e-mail Business. 

A 50% reduction in the price of e-mail in a short period of time is "just astounding," Schadler said in a recent interview.Microsoft and Google are in the lead for customers, but they're not the only contenders, he continues in his report.

"Where e-mail was once a sleepy market for Microsoft, IBM, Novell (NOVL), and a long tail of alternatives, it is now a tumultuous battleground for the big four collaboration vendors: Cisco, Google, IBM, and Microsoft," Schadler writes.

Cisco is the newest entrant in the market, but is already pushing the envelope on price with BlackBerry support for $1 per month, "a huge price drop for a market used to paying $7 to $10 per user per month for a full BlackBerry Enterprise Server license," Schadler writes.

Each vendor has its strengths. Google's Gmail integrates with collaboration tools like Sites, Docs, Talk and Video, and Google is using HTML5 to provide offline e-mail access, Schadler writes. IBM offers tiered levels of services, with e-mail costing either $3 or $5. Microsoft goes even lower with a $2 "deskless worker" Webmail service, and has the advantage of integrating cloud services with Outlook and other software that business users are already familiar with.

That doesn't mean cloud e-mail will automatically be less expensive than an on-premise deployment, but in most cases the cloud will be cheaper. Forrester analysts began a new effort to analyze the e-mail market in 2008, and were surprised to learn "that nobody seemed to know how much they were actually spending on e-mail," Schadler writes.

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