Optimism is the Message

Rockliffe, Mirapoint, and a pair of research firms agree that the Internet messaging market is booming. Vendors expect ISPs to get the message and cash in on the trend.

by Alex Goldman ISP-Planet Associate Editor [June 20, 2002]

In the post-boom back-to-basics era of ISP business, e-mail is becoming a hotspot of market activity again. But e-mail is not the same old original "killer app" from yesterday. Today's messaging applications distribute e-mail to both wired and wireless devices, catering to business professionals accessing e-mail from PDAs, laptops, desktops and occasionally, cellular phones.

It's certain that competition is heating up among e-mail messaging vendors. Last week, Mirapoint introduced a new upgrade program designed to make it easier for customers who are using messaging systems it considers to be under-performing or unsupported (like Critical Path, Sun/iPlanet, and Openwave) to transition to its messaging products. At the other end of the e-mail messaging spectrum is Microsoft's Web-based service, Hotmail, which two weeks ago began to charge for storage of its POP3 e-mail program. One of Hotmail's chief rivals, Yahoo, has been charging for its Web-based e-mail services since April.

The good news is that the competition among e-mail messaging services is getting fierce because the segment is forecast to grow rapidly, not because the market is shrinking, like in so many other areas of the IT/IS industry.

In a recent report, Messaging Applications Forecast 2002-2006, IDC analysts contend that the messaging market will grow from $401 million today to $834 million in 2006—more than doubling the e-mail messaging market in revenue terms over just four years.

A report from The Radicati Group, Corporate Messaging and Collaboration Deployment and Procurement Plans 2002-2004, found that 33 percent of large corporations already have messaging and collaboration budgets in excess of $5 million a year. Analysts said that some companies hesitate to outsource e-mail operations because of concerns about security and "loss of control" which could pose theoretically unlimited costs.

In today's security wary market, software vendors and equipment makers foresee significant opportunities in providing secure e-mail messaging. They believe that managers will require proven and reliable messaging software and hardware.

John Davies, Rockliffe president, chief executive officer and co-founder, said that ISPs are optimistic about increasing revenues without free ISP competition.

"Hotmail and Yahoo starting charging, so ISPs can charge for services too," Davies said. "E-mail is now a critical business function—business stops when the e-mail flow stops—so business now want e-mail to be as reliable as phone service."

Davies explained that Rockliffe commissioned its own study to test the market for e-mail messaging service and found that ISPs large and small are optimistic about the future.

"We had expected to find that small ISPs would expect to be rolled up by larger ISPs, but found quite the contrary," Davies said. "They seem to be optimistic that they can compete, perhaps because they feel they'll be able to charge for services now that their larger competitors are doing so."

However, Davies has a warning about switching from free messaging to premium messaging programs. "When providers start charging, they need to deliver a better, reliable service," Davies said. "A free service did not need to be reliable and customers could not complain when a free service failed."

The Rockliffe survey was conducted by surveymonkey. The company queried 115 ISPs of all sizes around the world. In the United States, only 3.8 percent of ISPs were pessimistic about the future, 15.4 percent saw their future as "fair," and 80.7 were optimistic about their future. Of the U.S. ISP sample, 84.6 percent managed fewer than 10,000 mailboxes and 15.4 percent managed 10,001 to 50,000 mailboxes.

Rockliffe, which specializes in e-mail servers for Windows, has two products for service providers: Rockliffe MailSite SP (the SP is short for service provider) and a more robust version of the same program known as MailSite Nonstop Himilaya. The MailSite SP solution is based on a cluster of Windows 2000 servers and should be sufficient for small- to medium-sized service providers. For larger service providers, Rockliffe worked with Compaq (now HP) to develop five-nines (99.999) e-mail messaging uptime based on the HP's top-of-the-line Non Stop servers.

Since SP can scale significantly, it should be sufficient for most ISPs. Davies reports that one client is supporting 2 million Web-based e-mail users while another is supporting 500,000 small business clients.

Davies said that supporting such mission-critical e-mail messaging systems is all about knowing your user base so that you can juggle simultaneous demand for services and scale accordingly.

"Concurrency with SMB clients is high because most log on around 9 AM and log off around 5 PM. SMB customers send and receive larger messages, with more attachments, while Web mail customers send a higher volume of messages, but the messages themselves are usually shorter," Davies explained. "Concurrency is lower for Web mail customers, although some SMB hosts have customers in various time zones, lowering concurrency. Overall, messaging systems can support fewer SMB customers than Web mail customers."

Whichever type of messaging service you provide, Davies feels Rockliffe has a good product to sell you, and the company is working on making it better. Rockliffe plans to incorporate improved spam filters, including "blacklist" options and the Sieve filtering language, designed to create filters for e-mail at the time of final delivery. But even so, Davies says that there's no purely technological solution to spam—any anti-spam system will continue to require a human component.

As to Rockliffe, Davies says the company is on track to double its customer base during the year 2002, a real achievement even in a growing market. Which just goes to show you, that the analysts are right when they say that messaging is the king of "killer apps" of the Net.

— End