Applications

The Original Hosted Exchange

There have been imitators, competitors, and plenty of alternatives, but this company was the first to offer this service, its CEO told us at ISPCON.

by Alex Goldman ISP-Planet Managing Editor [June 4, 2007]

When ISPCON reached its Friday morning hiatus, after a long night CEO session for some and late night vendor meetings for others, we got a chance to sit down and talk to Ravi Agarwal, founder and CEO of Burlington, Mass.-based groupSpark, provider of private label Microsoft Exchange.

The name, he says, was available, which was important. To him, "group" implies collaboration, which is what Exchange is about, and "spark" implies innovation, which is what his company does.

We were first
"We started in November of 2002," he says, "and it took us over a year to get to market."

That's because the concept of private label Exchange was new. "At the time, it was retail only. There was a niche I saw—and it was not a small niche. There are 25 million to 30 million SMBs in the U.S. The problem we faced was building a process that would allow us to reach the market. We decided early on to focus on working with resellers."

The result, Agarwal says, was so successful that it was immediately copied. However, the company established a first mover lead with the help of Microsoft, which continues to feature it prominently at such conferences as the Microsoft Worldwide Partner Conference.

We ask about competition from Exchange replacements such as Bluetie and Hostopia and Zimbra. Agarwal concedes that they can be cheaper, but notes that for customers more interested in features than price, Microsoft delivers. "There's always going to be a Corolla on the market, but everybody wants a Camry," says Agarwal.

Companies pay for features like Blueberry syncing and unified communications. If they want a shared calendar and contact list and that's all, they can get those more cheaply.

"Some people will choose to spend more time and save money," says Agarwal. "Our customers need to save time."

Pricing
The price, Agarwal says, starts at about $6 to $8 per mailbox per month (with unlimited aliases such as sales@com.com). He adds that the median resold price is $13 to $15, but that some companies price lower to draw customers in. Others start low and plan to upsell. Still others price above the market, positioning their service as a quality product that people will pay more for.

Services
The key to getting more money from customers, Agarwal says, is selling them more services. Whether it's blackberry connectivity, Microsoft Sharepoint collaboration with wikis and blogs and VPN-less interoffice connectivity, check in and check out of documents (with all old versions saved).

Recently, groupSPARK added Microsoft CRM and archiving (mostly for compliance).

groupSPARK uses Postini for anti-virus and anti-spam.

Key to keeping the customers: single sign-on offered through an XML API.

Generally, end customers have 7 to 10 employees, but some range up to about 1,000 employees.

The future
groupSPARK anticipates getting new business from the Exchange 2007 upgrade cycle. "It's a new sales opportunity for us," says Agarwal. "Exchange 2007 requires 64 bit servers, so companies need all new hardware. This makes a hosted service attractive. In contrast, the change from Microsoft Exchange 2000 to 200 was a simple upgrade."

groupSPARK, Agarwal is eager to point out, has over 1,000 partners worldwide but still requires no monthly minimum and no setup fee.

So what's the next feature the company will add? "Around June 1, 2007, we will add private label tier 1 support. We will answer the phone in the name of our partner. It's what our partners have been asking for."

— End