Last week, I offered a sample of some of the key findings from Frost & Sullivan's latest study on the hosted email market. This week, I'm focusing on the World On-premises Email Market, another study conducted by my colleague, Subha Rama.
On-premises email includes enterprise server-side and client-side software for PC desktops, such as IBM Lotus Notes/Domino, Microsoft Exchange/Outlook and Novell GroupWise. These vendors also provide web clients and email clients for mobile devices. For the purposes of market sizing, we have taken the average price of an email seat to include client access licenses and other server software costs for maintenance of existing seats, new licenses and upgrades. The seat count does not include free or consumer email seats.
Here, some highlights of the study; clients can download the full report here:
* The world on-premises enterprise email market saw a growth rate of 6.6 percent, with revenues reaching $2.8 billion in 2008. Between 2008 and 2015, the market is expected to grow at a compound annual growth rate of 3.2 percent to reach $3.5 billion in total revenues.
* Today, enterprises have legitimate concerns about the cost and complexity of maintaining an email infrastructure in-house. On-premises email platforms are complicated and expensive, and require expertise and investment. Growing network and storage requirements also escalate costs, as do archiving (online backup and recovery), compliance and security (filtering, spam and virus control, etc.). In smaller deployments, this translates into higher costs per mailbox, as economies of scale are not achieved.
* The on-premises email market has long been dominated by two vendors, Microsoft and IBM. Novell, the third largest market participant, has retained its user base but has not seen significant growth. A handful of open-source vendors and smaller providers offer an alternative to the Exchange and Lotus platforms, but they have a small market presence.
* In a mature and highly consolidated market, end users have little bargaining power. Market growth gets restricted in the absence of diversity and choice.
* On an average, enterprise workers spend two to three hours on email a day. Email sizes have burgeoned and so has the capacity of mailboxes.
* North America and Western Europe are relatively more mature markets for on-premises email. In 2008, the two regions accounted for 83 percent of total revenues. Asia Pacific, which is seeing a comparatively higher growth in on-premises deployments, accounted for 17 percent of the global revenues.
* We expect IBM to continue to score in environments where enterprise email decisions are closely aligned to a collaboration roadmap, since Lotus has its foundation in groupware and collaboration. Microsoft excels in terms of scalability, flexibility and performance, key reasons cited by a number of its users on their choice of email platform. However, the high cost of infrastructure, migration and proprietary platforms based on the .NET and Windows environments pose challenges for some customers. Enterprises that prefer a single-vendor approach typically tend to select Microsoft, while IBM environments include best-of-breed products in large enterprises with native IT management expertise.
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