Hosted Business and Collaboration Market Quadrant 2012

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1 . THE RADICATI GROUP, INC. The Radicati Group, Inc Embarcadero Road, Ste. 206 Palo Alto, CA Phone: (650) Fax: (650) Hosted Business and Collaboration Market Quadrant An Analysis of the Market for Hosted Business , Revealing Top Players, Mature Players, Specialists and Trail Blazers. September 2012 Radicati Market Quadrant SM is copyrighted September 2012 by The Radicati Group, Inc. Reproduction in whole or in part is prohibited without expressed written permission of the Radicati Group. Vendors and products depicted in Radicati Market Quadrants SM should not be considered an endorsement, but rather a measure of The Radicati Group s opinion, based on product reviews, primary research studies, vendor interviews, historical data, and other metrics. The Radicati Group intends its Market Quadrants to be one of many information sources that readers use to form opinions and make decisions. Radicati Market Quadrants SM are time sensitive, designed to depict the landscape of a particular market at a given point in time. The Radicati Group disclaims all warranties as to the accuracy or completeness of such information. The Radicati Group shall have no liability for errors, omissions, or inadequacies in the information contained herein or for interpretations thereof.

2 TABLE OF CONTENTS RADICATI MARKET QUADRANTS EXPLAINED... 3 MARKET SEGMENTATION... 5 EVALUATION CRITERIA... 7 MARKET QUADRANT - HOSTED BUSINESS AND COLLABORATION PROVIDERS KEY MARKET QUADRANT TRENDS HOSTED BUSINESS AND COLLABORATION PROVIDERS - VENDOR ANALYSIS TOP PLAYERS TRAIL BLAZERS SPECIALISTS MATURE PLAYERS =============================================================== Please note that this report comes with a 1-5 user license. If you wish to distribute the report to more than 5 individuals, you will need to purchase an internal site license for an additional fee. Please contact us at if you wish to purchase a site license. Companies are never permitted to post reports on their external web sites or distribute by other means outside of their organization without explicit written prior consent from The Radicati Group, Inc. If you post this report on your external website or release it to anyone outside of your company without permission, you and your company will be liable for damages. Please contact us with any questions about our policies. =============================================================== Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 2

3 RADICATI MARKET QUADRANTS EXPLAINED Radicati Market Quadrants are designed to illustrate how individual vendors fit within specific technology markets at any given point in time. All Radicati Market Quadrants are composed of four sections, as shown in the example quadrant (Figure 1). 1. Specialists This group is made up of two types of companies: a. Emerging players that are still very new to the industry and have not yet built up much of an installed base. These companies are still developing their strategy and technology. b. Established vendors that offer a niche product. 2. Trail Blazers These vendors offer cutting edge technology, but have not yet built up a large customer base. With effective marketing and better awareness, these companies hold the power to dethrone the current market leaders. Trail blazers often shape the future of technology with their innovations and new product designs. 3. Top Players These are the current leaders of the market, with products that have built up large customer bases. Vendors do not become top players overnight. Most of the companies in this quadrant were first specialists or trail blazers (some were both). As companies reach this stage, they must fight complacency and continue product innovation, or else they will be replaced by the next generation of trail blazers. 4. Mature Player These vendors have large, mature installed bases of customers, but no longer set the pace for the rest of the industry. These vendors are no longer considered movers and shakers as they once were. a. In some cases, this is by design. If a vendor has made a strategic decision to move in a new direction, it may slow development on one product line and start another. Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 3

4 Low Market Share High Hosted Business and Collaboration - Market Quadrant 2012 b. In other cases, a vendor may simply become complacent as a top vendor and be out-developed by hungrier trail blazers and other top players. c. Companies in this stage either find new life and revive their R&D, moving back into the top players segment, or else they slowly fade away as legacy technology. Figure 1, below, shows a sample Radicati Market Quadrant. As a vendor continues to develop its product, it will move horizontally along the x axis. As market share changes, vendors move vertically along the y axis. It is common for vendors to move between quadrants over the life of a product, as their products improve and market requirements evolve. Radicati Market Quadrant Mature Players Top Players Company Z Company L Company Y Company J Company H Company D Company B Company C Company A Specialists Low Functionality Company F Company G Company E Trail Blazers Figure 1: Sample Radicati Market Quadrant High Functionality is rated from 1 to 10, with 10 being the highest, and 1 the lowest. Market Share is assigned according to the company s ranking in our latest annual reports, based on its user Installed Base (e.g. the company with the largest installed base market share is number 1, the one with the second largest installed base market share is number 2, etc.). Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 4

5 MARKET SEGMENTATION This edition of Radicati Market Quadrants covers the Hosted Business and Collaboration market, which is defined as follows: Hosted Business and Collaboration Providers offer cloud-based services that provide robust, enterprise-grade functionality aimed at business users. These providers typically offer services on a multi-tenant server located in their data centers. Some providers may also offer dedicated hosting options for customers with more unique requirements. Some of the more widely known Hosted Business and Collaboration providers include: Apptix, AppRiver, Ceryx, Google, IBM, Intermedia, Microsoft, NaviSite, Rackspace, and SILVERSKY. Hosted Business and Collaboration solutions may be based on many technology platforms, including basic POP3/IMAP, Microsoft Hosted Exchange, or other proprietary technology. Over this past year, the demographics of organizations migrating to cloud-based services has shifted considerably. Whereas previously SOHOs and SMBs were the main customers of Hosted Business and Collaboration solutions, mid-market and larger organizations are also beginning to embrace the cloud. The main drivers for this, besides cost and ease of administration, are: o Cloud-based and collaboration solutions are a simple way for larger businesses to connect geographically dispersed work teams or regional offices with one common infrastructure. o Oftentimes, large enterprises have a complex mix of various systems obtained via acquisitions and mergers. Sometimes, the best way to unify these solutions is through a hosted solution. This can simplify the licensing and hosting contracts that may exist. Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 5

6 o Some large organizations are adopting a hosted solution for redundancy as a secondary, back-up solution in case their main onpremises system fails. o Hosted and collaboration solutions can also give large organizations the option to extend and related services to non-office workers that have traditionally not had access to in the past, such as retail or factory workers. Low price points and the ease of deployment make serving these employees feasible. In 2012, Hosted Business and Collaboration mailboxes represent 21% of Business mailboxes worldwide. Figure 2, below, shows this breakout. Hosted Business and Collaboration Mailboxes, 2012 Hosted Business Mailboxes 21% Other Business Mailboxes 79% Figure 2: Hosted Business and Collaboration Mailboxes, 2012 Note: Microsoft Hosted Exchange is a rapidly growing sub-segment of the Hosted Business and Collaboration market and is dealt with in a separate Market Quadrant report titled Microsoft Hosted Exchange Market Quadrant Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 6

7 EVALUATION CRITERIA Hosted Business and Collaboration providers are positioned in the quadrant, according to two criteria: Market Share and Functionality. Market Share is based on the installed base published in our Hosted and Collaboration Market, report. The provider with the largest installed base has a market share of 1, the one with the second largest installed base has a market share of 2, etc. In order for a Hosted Business and Collaboration provider to be positioned in the Top Player or Mature quadrants, they need to have a market share of 1 to 7. Hosted Business and Collaboration providers with smaller installed bases are positioned either in the Trail Blazer, or Specialist quadrants. Functionality we assess each Hosted Business and Collaboration providers solution based on a number of key service differentiators. In order for a Hosted Business and Collaboration provider to be on the right side of the quadrant (Top Player or Trail Blazer), its solution should have the following capabilities: Hosted platforms exist in many flavors, the most common being POP mailboxes, Google Gmail (as part of Google Apps), and Microsoft Exchange Server. Businesses should consider whether they need the full functionality that comes with a platform like Microsoft Hosted Exchange, or whether they should instead opt for a simpler, less expensive platform based on POP. Some hosted providers offer Microsoft Hosted Exchange and a POP-based solution that can be combined for a more cost-effective solution. Hosted providers that can offer multiple platforms have a unique value advantage over other providers that exclusively sell either Microsoft Hosted Exchange or their own proprietary hosted solution. Mailbox size should offer businesses flexibility to accommodate mailboxes with thousands of s with large attachments that may take up several gigabytes. More hosting providers are also beginning to offer mailbox options that have unlimited storage, but it still common to have limits imposed. Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 7

8 Management consoles should provide an intuitive interface that allows administrators to perform mailbox provisioning tasks with a high degree of granularity over user services. Migration support should be provided with migration tools and a professional service team that helps new customers migrate from on-premise or other hosting providers. Customer support has become one of the key differentiating factors in this market. Most hosted providers essentially offer the same service. In fact, with the exception of some subtleties, such as a modified control panel, all Microsoft Hosted Exchange providers run the exact same software to power their services. Therefore, customer support is a key area where vendors can differentiate themselves. Most hosted providers offer a support team that is available 24x7 to answer questions via phone or . Service Level Agreements (SLAs) should also come standard with at least a 99.9% uptime guarantee. Active Directory (AD) synchronization lets businesses synchronize their Active Directory (AD) servers with their hosting provider s Active Directory (AD) servers for a simpler, quicker way to provision users and groups. Active Directory (AD) synchronization is also paramount in providing single sign-on capabilities. Security features are another key area of differentiation. Most providers include anti-spam and antivirus protection for their mailboxes. Some providers also offer more options, such as mobile device management, encryption, and more. Mobility features should offer two-way over-the-air (OTA) synchronization via services such as Microsoft Exchange ActiveSync (EAS) or BlackBerry Enterprise Server (BES). This is an increasingly important feature as mobile device usage becomes more prevalent. Other services, such as instant messaging (IM), hosted PBX, archiving, unified communications (UC) and other related features, are commonly deployed alongside a hosted package. These services act as complements to a hosted solution, and bring more value to businesses. Not so common features, such Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 8

9 as IP acceleration technology, can also serve as a differentiating feature. Flexible deployment options let businesses choose between multi-tenant hosting, or dedicated hosting. A multi-tenant environment may be the most common and economical option, but it is not suitable for every business. Strong track record from hosting providers, such as actual uptime, timely software upgrades, and more, should be examined by potential customers. Note: On occasion, we may put a player on the right side of the quadrant by giving them a higher than typical Functionality Score, even if they are missing one or two of the features mentioned above, if we feel that the other aspects of their solution are particularly unique and innovative. Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 9

10 Low Market Share High Hosted Business and Collaboration - Market Quadrant 2012 MARKET QUADRANT - HOSTED BUSINESS AND COLLABORATION PROVIDERS Hosted Business and Collaboration Market Quadrant, 2012 Mature Players Go Daddy Rackspac e Fus Google Top Players Microsoft SilverSky Intermedia SherWeb NaviSite Apptix AppRive r Ceryx mindshift CenterBeam Specialists IBM Trail Blazers Figure 3: Hosted Business and Collaboration Market Quadrant, 2012 Low High Functionality Note: This Market Quadrant deals only with Hosted Business and Collaboration providers in North America. Radicati Market Quadrant SM is copyrighted September 2012 by The Radicati Group, Inc. Reproduction in whole or in part is prohibited without expressed written permission of the Radicati Group. Vendors and products depicted in Radicati Market Quadrants SM should not be considered an endorsement, but rather a measure of The Radicati Group s opinion, based on product reviews, primary research studies, vendor interviews, historical data, and other metrics. The Radicati Group intends its Market Quadrants to be one of many information sources that readers use to form opinions and make decisions. Radicati Market Quadrants SM are time sensitive, designed to depict the landscape of a particular market at a given point in time. The Radicati Group disclaims all warranties as to the accuracy or completeness of such information. The Radicati Group shall have no liability for errors, omissions, or inadequacies in the information contained herein or for interpretations thereof. KEY MARKET QUADRANT TRENDS Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 10

11 Google, Microsoft, SILVERSKY, and Intermedia rank as Top Players in the Hosted Business and Collaboration market. o Google was the first major vendor to offer hosted for businesses with its Google Apps solution that bundles , a productivity suite, and much more to meet the needs of the enterprise. Google Apps is a powerful, full-featured solution designed from the ground-up for the cloud that is easy to deploy and administer by organizations of all sizes. o Microsoft Office 365 takes advantage of the vendor s latest server technologies (Microsoft Exchange Server 2010, Microsoft SharePoint Server 2010, and Microsoft Lync 2010) that were designed specifically for use in the cloud. One key component of Microsoft s success is its ability to bundle Microsoft Office Web Apps with Microsoft Office 365 for cloud-based access to the latest Office productivity suite from Microsoft. o SILVERSKY, backed by its parent company SilverSky, places a great deal of emphasis on security and compliance throughout its solution offerings. All of SILVERSKY s Hosted Exchange offerings have robust security features, and comply with federal and industry rules and regulations, such as FINRA, HIPAA, and more. SILVERSKY has strong appeal with mid-size and larger companies that have stringent security and regulatory requirements. SILVERSKY also offers its Commercial Messaging Service (CMS) that delivers a secure, cost-effective hosted platform for businesses with more basic needs. o Intermedia is one of the largest and fastest growing Microsoft Hosted Exchange providers, and offers a full range of services, including POPbased hosted , instant messaging (IM), document management, backup, mobility, Hosted VoIP, and Unified Communications (UC). Intermedia has a solid line of Hosted and Collaboration offerings to target the SMB market that scale from a relatively basic plan to much more sophisticated offerings with encryption and other advanced features. Intermedia also has a strong development team, which helps it to quickly rollout new solutions and features. Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 11

12 SherWeb, NaviSite, Apptix and Ceryx rank as Trail Blazers. These vendors offer a comprehensive range of services and are innovators in the Hosted Business and Collaboration market. However, these vendors do not yet have the large market share that would position them as Top Players. As they build momentum and grow their installed base, they are likely to move into the Top Player quadrant. o SherWeb offers a wide range of and collaboration services, such as POP-based proprietary , Microsoft Hosted Exchange, Microsoft SharePoint, Microsoft Dynamics CRM, and Microsoft Lync for the SMB market. The company differentiates itself from other Hosted Business and Collaboration providers by offering a simple, powerful Microsoft Hosted Exchange service that can be accompanied by the vendor s data backup and archiving services. Its POP-based proprietary is also an option for businesses that just need access to basic mailboxes. o NaviSite has built up the expertise and ability to deal with larger organizations that have more complex requirements. The vendor can seamlessly integrate its services with third-party software, as well as customize environments down to the smallest specifications. In addition, NaviSite s low pricing and virtual dedicated solutions make the vendor quite an attractive provider for the mid-market for hosted needs, such as Microsoft Hosted Exchange and IBM Hosted Notes/Domino. o Apptix is a leading Microsoft Hosted Exchange provider, and has found success in offering a broad range of hosted communications and collaboration services to SMBs, including Hosted VoIP, Microsoft Hosted SharePoint, Web conferencing, and Microsoft Hosted Lync. Apptix has an early mover advantage with its Hosted Unified Communications (UC) solution for companies that are ready to move all their communication needs to the cloud. o Ceryx targets the mid-market with its Microsoft Hosted Exchange services. In addition to traditional multi-tenant hosting, Ceryx also offers a Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 12

13 dedicated cloud option that may be of more interest to its target market. Ceryx offers a wide array of security features that can be bundled with its offerings. These security features combined with its dedicated cloud give a strong sense of protection to Ceryx customers, and are complemented with archiving, encryption, and other sophisticated and collaboration functionality. AppRiver, mindshift, CenterBeam, and IBM are in the Specialist quadrant. These companies have a loyal client base, but have been less aggressive in coming out with new features and functionality. Moreover, their overall market share is also somewhat limited. o AppRiver offers a secure Microsoft Hosted Exchange solution that caters to SMBs. The vendor s Microsoft Hosted Exchange solution employs a unique IP acceleration technology from Akamai that speeds up network connection for an enhanced performance. AppRiver also resells Microsoft Office 365 packages via Microsoft s syndication model. The vendor, however, lacks some basic technologies, such as Active Directory (AD) integration for its Microsoft Hosted Exchange solution. o mindshift offers a broad range of cloud and managed IT solutions that include services for virtualization, security, storage, VoIP, hosting, customer relationship management (CRM), as well as and collaboration services. The future of mindshift, however, is uncertain since its parent company, Best Buy, is soliciting offers to sell itself. o CenterBeam s 365+ Microsoft Hosted Exchange solution comes complete with Microsoft SharePoint and Microsoft Lync. The vendor also focuses a lot of effort on its endpoint security solution that can be deployed alongside the provider s 365+ solution. CenterBeam s Microsoft Hosted Exchange solution is a good start for small companies looking for a basic, secure hosted solution. o IBM has rebranded IBM LotusLive as IBM SmartCloud for Social Business with the goal of delivering a more streamlined portfolio of social business solutions that are based in the cloud. IBM SmartCloud offers a broad range of Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 13

14 cloud-based services, which include , collaboration, and Web conferencing. IBM is getting ready to release IBM Docs that will feature a cloud-based productivity suite to create documents, spreadsheets, and presentations. IBM, however, is very late to the game, introducing this new feature years after Microsoft and Google have offered similar functionality. Go Daddy, Rackspace, and Fus rank as a Mature Players. These companies have large installed bases but do not offer highly innovative solutions. o Go Daddy is a leading provider of Web hosting, domain names, SSL security certificates, as well as a number of online business services for individuals and organizations. For basic needs, the company offers a larger variety of POP and IMAP-based proprietary offerings than many other providers. Go Daddy also offers Microsoft Hosted Exchange packages. These solutions, however, remain relatively basic, and cater mainly to customers that are looking for a simpler, less expensive option for their messaging needs. o Rackspace offers a wide range of , collaboration, file sharing, and online backup services. Customer support is a big differentiator for Raskspace through its Fanatical Support Team. For hosted , Rackspace offers Microsoft Hosted Exchange and a proprietary POP/IMAP hosted platform for customers to choose from. The company s POP/IMAP solution is one of the more powerful proprietary solutions available with mobility features powered by Microsoft Exchange ActiveSync (EAS) available as an add-on. o Fus offers a proprietary POP/IMAP solution and a Microsoft Hosted Exchange solution that is available with a robust set of features centered on security and archiving. Microsoft SharePoint and Microsoft Exchange ActiveSync (EAS) are also available for Fus mailboxes. Some basic add-on features, however, are not available for Fus customers. Most notably, the vendor does not currently offer Microsoft Lync. Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 14

15 HOSTED BUSINESS AND COLLABORATION PROVIDERS - VENDOR ANALYSIS Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 15

16 TOP PLAYERS GOOGLE 1600 Amphitheatre Parkway Mountain View, CA Google Apps is a cloud-based suite that includes services for , collaboration, and productivity. Google Apps services are entirely Web-based and do not require any additional desktop software other than a Web browser. Google Apps is available in several different editions that all keep the same core functionality. Available versions include Google Apps (free), Google Apps for Business, Google Apps for Government, and Google Apps for Education (free). FUNCTIONALITY: 7 MARKET SHARE: 1 KEY STRENGTHS: Google Apps is entirely cloud-based and does not require any on-premise or desktop components, all features and functionality can be accessed through any Internet browser. Google handles seamlessly all migrations on the backend, freeing customers from constant upgrades. Google offers real-time, multi-user editing of documents, spreadsheets and presentations with Google Docs. Google also enables cloud storage, collaboration and synchronization of any file type, across multiple devices (PC, laptop, tablet, smartphone, etc) with Google Drive. Google Apps includes robust, real-time communication tools including instant messaging, voice calls and multi-person video meetings with screensharing and that s integrated with Gmail and Google Docs. Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 16

17 Google Apps offers native apps for ios and Android, that work on any phone with a web browser and includes mobile device management that allows company administrators to set policies and manage employee mobile devices. KEY WEAKNESSES: Google Gmail and other services in Google Apps have a consumer-oriented look and feel that some businesses may find disappointing. Google Apps is only available as a multi-tenant hosted service. There are currently no dedicated versions of Google Apps, which may be disappointing to larger customer organizations that would prefer a dedicated option. Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 17

18 MICROSOFT 1 Microsoft Way Redmond, WA Released in 2011, Microsoft Office 365 is the successor to Microsoft Business Productivity Online Suite (BPOS). The main services include Microsoft Exchange Online for and collaboration based on Microsoft Exchange Server 2010; Microsoft Office Web Apps for Web-based applications of Microsoft Word, Microsoft Excel, Microsoft PowerPoint, and Microsoft OneNote; Microsoft SharePoint Online for team collaboration and document management based on Microsoft SharePoint Server 2010; and Microsoft Lync Online for instant messaging (IM) and presence awareness based on Microsoft Lync All services are maintained and hosted by Microsoft in georedundant data centers with a 99.9% financially-backed SLA. FUNCTIONALITY: 8 MARKET SHARE: 2 KEY STRENGTHS: Microsoft Office 365 lets customers subscribe to Microsoft Office Web Apps, which allows organizations to access a cloud-based version of Microsoft Office. For the first time, Microsoft s 2010 versions of its messaging and collaboration server technologies (Microsoft Exchange Server 2010, Microsoft SharePoint Server 2010, and Microsoft Lync 2010) were designed specifically for the cloud. This provides a better experience for organizations that subscribe to Microsoft Office 365. Microsoft s Enterprise Agreement (EA) allows for concurrent on-premise and hosted deployments of Microsoft s server technologies. This allows customers to gradually transition to the cloud at their own pace. Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 18

19 KEY WEAKNESSES: Updates to Microsoft Office 365 services are not as seamless as some other cloudbased and collaboration solutions. Upgrades sometimes require a fair amount of effort on the part of customers. Customers may be forced to upgrade their own on-premise technology before they can take advantage of all of the features of Microsoft Office 365. Microsoft requires 30,000 seats for a dedicated solution. Most other Hosted Exchange providers usually offer dedicated offerings starting at around the 3,000 seat mark. Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 19

20 SILVERSKY, A SILVERSKY BRAND 7900 E. Union Avenue Suite 800 Denver, CO Founded in 1996, SILVERSKY is a leading provider of comprehensive end-to-end messaging solutions, including Microsoft Hosted Exchange and Commercial Messaging Services (CMS), its proprietary solution. The vendor also offers wireless , archiving and compliance, collaboration services, and more. In 2007, SILVERSKY was acquired by SilverSky, an enterprise software-as-a-service (SaaS) security provider headquartered in Milford, CT. FUNCTIONALITY: 9 MARKET SHARE: 5 KEY STRENGTHS: For a more economical solution, customers can mix-and-match Microsoft Hosted Exchange mailboxes with the more cost-effective Commercial Messaging Solution (CMS). SILVERSKY has developed a unified management interface for customers that have deployments of Microsoft Hosted Exchange and SILVERSKY s proprietary hosted solution, Commercial Messaging Solution (CMS). SILVERSKY places more emphasis on security and compliance compared to other service providers in this market. SILVERSKY s parent company, Perimeter esecurity, provides the vendor with strong credibility among organizations that require secure hosted services. KEY WEAKNESSES: SILVERSKY s Cloud Mobile Device Management solution will have its own management interface that is separate from the unified management interface for Copyright September 2012 The Radicati Group, Inc. Reproduction Prohibited 20

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