THS Articles

Microsoft Says: "If You’ve Got Mail We’ve Got Hosting Solutions"

By Cliff Boodoosingh

Email, it's a word we can’t avoid in daily conversation and a tool we’ve come to rely on every minute of every day. Hundreds of companies have found ways to make money in the past decade from the "killer app" and hundreds continue to dream up of ways to cash in.

And then there’s Microsoft at the heart of it all, proudly trumpeting ways for the Web hosting community to claim its rightful stake.

On January 11th in a crowded seminar room, nearly 100 Web hosts, ISPs and SMBs joined Microsoft to explore its solution for Hosted Messaging and Collaboration (HMC). This was the Canadian stop (at Microsoft’s Mississauga, Ontario, Canada campus) in the worldwide traveling Road Show to outline the business opportunity and dive deep into the new MS 3.5 version released in November 2005.

Few in the audience disputed the business case. How could you? The worldwide HMC opportunity is roughly 40 million small businesses with less than 25 employees and more than 670,000 medium-sized businesses with less than 100 employees translating into about 520 million PCs worldwide.

“Seven to 10 percent will require business functionality so about 36 million business class mailboxes with an opportunity of $4.5 billion in base service revenue” is up for grabs said Michael van Dijken, Microsoft’s Hosting Marketing Manager.

“This is good for you, good for hosting,” he added to the delight of the visibly enthusiastic audience.

Microsoft and The Radicati Group have conducted extensive research and they’ve discovered that SMBs currently using POP3 and Web-based email are interested in moving to enhanced messaging systems but are reluctant to deploy complex in-house email systems.

“The IT industry is back to (favoring) outsourcing and Software as a Service…and legislative requirements, audit trails, Sarbanes-Oxley plus confidence requirements are additional drivers,” noted van Dijken.

Richard Cowper, a Technical Support specialist from Web hosting provider FibreWired in Burlington, Ontario said his company was sold on the platform in March 2004 when HMC version 3.0 was launched.

“We were the second Canadian company to adopt HMC. Today we’re looking at ways to bundle the package for customers. But a lot of Web hosting clients are happy with the five free emails in their hosting packages…it's about educating them and working on the upsell.”

A Web hosting veteran of 10 years, Ted Rajanayagam, VP of Network Services for NetPulse in Markham, Ontario has been weighing in on the HMC value proposition for the past two years.

“We thought it was a bit premature when it came out initially but the market right now is good so we signed on three months ago. We’ve already acquired two customers and we expect to break even on this in eight months. It usually takes about 16 months to break even on similar services.”

A few skeptics wanted to ensure that Microsoft Support would be strong before considering the venture especially in light of the broad selection of messaging services being included, such as: individual and group calendaring, scheduling tools, contract management, storage, personal domains and the increasingly popular mobile device synchronization.

Van Dijken pointed out that there is a dedicated group of Microsoft employees monitoring the company’s hosting forums who are quite responsive and effective in troubleshooting. He also announced that support contracts at various levels of criticality including instant response would be introduced shortly by Microsoft as well as a pay-as-you-go model with a nominal fee per incident.

And if service providers were still gun-shy about rolling out the enhanced hosted message offering, Intermedia.NET’s Jeff Preece offered an alternative.

“A lot of companies just don’t have the IT capability and just to take care of the 99.99 Service Level Agreements can be pretty intense. So we’re here to provide a (private-label) package that will appeal to the resellers; it's a great way to go to market quickly. We’ve found the sweet spot for HMC to be the SMBs with between 25-50 employees, these are the businesses that really need this.”