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1 PLATFORMS MARKET FORECAST THE RADICATI GROUP, INC EMBARCADERO ROAD, SUITE 206 PALO ALTO, CA TEL: QUOC HOANG PRINCIPAL ANALYST SARA RADICATI, PHD EDITOR =============================================================== Please note that the report you purchased includes 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 admin@radicati.com if you wish to purchase an additional 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. ===============================================================

2 TABLE OF CONTENTS SCOPE... 5 METHODOLOGY... 6 EXECUTIVE SUMMARY... 7 CHAPTER ONE MARKET ANALYSIS MARKET DEFINITION MARKET SEGMENTATION ENTERPRISE PLATFORMS KEY TRENDS AND ANALYSIS ENTERPRISE PLATFORMS CUSTOMER EVALUATION CRITERIA ENTERPRISE PLATFORMS MARKET SHARE BY VENDOR ENTERPRISE PLATFORMS FORECAST ENTERPRISE PLATFORMS INSTALLED BASE BY REGION ENTERPRISE PLATFORMS INSTALLED BASE BY BUSINESS SIZE FEATURE COMPARISON OF ENTERPRISE PLATFORMS MICROSOFT EXCHANGE SERVER DEPLOYMENT BY VERSION IBM LOTUS DOMINO DEPLOYMENT BY VERSION PLATFORMS FOR SERVICE PROVIDERS PLATFORMS FOR SERVICE PROVIDERS EVALUATION CRITERIA PLATFORMS FOR SERVICE PROVIDERS TRENDS AND ANALYSIS PLATFORMS FOR SERVICE PROVIDERS MARKET SHARE PLATFORMS FOR SERVICE PROVIDERS FORECAST PLATFORMS FOR SERVICE PROVIDERS INSTALLED BASE BY REGION PLATFORMS FOR SERVICE PROVIDERS REVENUE BY REGION PLATFORMS FOR SERVICE PROVIDERS BY PLATFORM TYPE FEATURE COMPARISON OF COMMERCIAL PLATFORMS FOR SERVICE PROVIDERS PLATFORMS FOR BUSINESS SERVICE PROVIDERS MARKET SHARE CHAPTER TWO PLATFORMS VENDORS ALT-N TECHNOLOGIES IBM IPSWITCH MICROSOFT NOVELL OPENWAVE SYSTEMS OPEN-XCHANGE ORACLE VMWARE ZIMBRA Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 2

3 LIST OF FIGURES FIGURE 1: WORLDWIDE PLATFORMS REVENUE FORECAST ($M), FIGURE 2: ENTERPRISE PLATFORMS IB MARKET SHARE, FIGURE 3: ENTERPRISE PLATFORMS REVENUE MARKET SHARE, FIGURE 4: ENTERPRISE PLATFORMS REVENUE FORECAST, FIGURE 5: ENTERPRISE PLATFORMS IB BY REGION, 2011 & FIGURE 6: ENTERPRISE PLATFORMS IB BY BUSINESS SIZE, 2011 & FIGURE 7: MICROSOFT EXCHANGE SERVER IB BY VERSION, 2011 & FIGURE 8: IBM LOTUS NOTES/DOMINO IB BY VERSION, 2011 & FIGURE 9: PLATFORMS FOR SERVICE PROVIDERS IB MARKET SHARE, FIGURE 10: PLATFORMS FOR SERVICE PROVIDERS REVENUE MARKET SHARE, FIGURE 11: PLATFORMS FOR SERVICE PROVIDERS REVENUE FORECAST ($M), FIGURE 12: PLATFORMS FOR SERVICE PROVIDERS IB BREAKOUT BY REGION 2011 & FIGURE 13: PLATFORMS FOR SERVICE PROVIDERS REVENUE BREAKOUT BY REGION, 2011 & FIGURE 14: PLATFORMS FOR BUSINESS SERVICE PROVIDERS IB MARKET SHARE, FIGURE 15: PLATFORMS FOR BUSINESS SERVICE PROVIDERS REVENUE MARKET SHARE, Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 3

4 LIST OF TABLES TABLE 1: ENTERPRISE PLATFORMS MARKET SHARE BY VENDOR, TABLE 2: ENTERPRISE PLATFORMS IB & REVENUE FORECAST, TABLE 3: ENTERPRISE PLATFORMS IB BY REGION, TABLE 4: ENTERPRISE PLATFORMS IB BY BUSINESS SIZE, TABLE 5: ENTERPRISE PLATFORMS - FEATURE COMPARISON, TABLE 6: MICROSOFT EXCHANGE SERVER IB BY VERSION, TABLE 7: IBM LOTUS NOTES/DOMINO IB BY VERSION, TABLE 8: PLATFORMS FOR SERVICE PROVIDERS BY TYPE, TABLE 9: PLATFORMS FOR SERVICE PROVIDERS IB & REVENUE MARKET SHARE, TABLE 10: PLATFORMS FOR SERVICE PROVIDERS IB & REVENUE FORECAST, TABLE 11: PLATFORMS FOR SERVICE PROVIDERS IB BREAKOUT BY REGION, TABLE 12: PLATFORMS FOR SERVICE PROVIDERS REVENUE BREAKOUT BY REGION ($M), TABLE 13: PLATFORMS FOR SERVICE PROVIDERS IB BREAKOUT BY PLATFORM TYPE, TABLE 14: COMMERCIAL PLATFORMS FOR SERVICE PROVIDERS FEATURE COMPARISON, TABLE 15: PLATFORMS FOR BUSINESS SERVICE PROVIDERS IB & REVENUE MARKET SHARE, Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 4

5 SCOPE This study provides an analysis of the Platforms market in 2011, and its potential growth over the next four years. It provides market size, installed base and revenue market share by vendor, and forecasted market growth in terms of installed base and revenues, from 2011 to The study also provides an analysis of key vendors. All market numbers, such as market size, forecasts, installed base, and any financial information presented in this study represent worldwide figures, unless otherwise indicated. All pricing numbers are expressed in $USD. Throughout this report, the terms and messaging are used interchangeably. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 5

6 METHODOLOGY The information and analysis in this report is based on primary research conducted by The Radicati Group, Inc in late It consists of information collected from vendors and users in global corporations via interviews and surveys. Secondary research sources have also been used, where appropriate, to cross-check the information collected. These include company annual reports and market size information from various market segments of the computer industry. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 6

7 EXECUTIVE SUMMARY platforms have evolved from delivering basic messages, to serving as the integration point for a wide variety of communication and collaboration technologies including; instant messaging (IM), mobility, web conferencing, team collaboration, social networking, and unified communications (UC). platforms are deployed on-premises by Enterprises or by Service Providers that offer cloud-based services to their subscribers. o Enterprise Platforms Enterprises have traditionally deployed platforms on-premises as a way of delivering business and other collaboration tools to their employees. More recently, Enterprises, particularly in the SMB, Education, Government, and Retail sectors have started to move away from on-premise offerings in favor of cloud-based services, in order to reduce IT costs. Despite this trend, on-premises deployment of platforms continues to be the predominant form of deployment in the enterprise space. o Platforms for Service Providers Service providers deploy platforms in order to offer services to their subscribers. Typically services are offered as an addition to a wide range of other services. Consumer-oriented service providers deliver experiences at no cost, as a way to increase the stickiness of their portals, and enrich the services they offer consumers. Business-oriented service providers offer enterprise-grade functionality, which also includes security, mobility, and a wide range of other features aimed at business users. These services are paid for on a subscription basis, and represent a new revenue stream for service providers. Today s workforce is bringing in more technology from their daily, consumer lives into their organization; most notably social networking sites, instant messaging, and mobile devices. Users expect to be able to use whatever devices or solutions they have in their daily lives, fully integrated into their business environments. This has led to the consumerization of many business applications, Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 7

8 including , and has forced platform vendors to support and integrate with many of the technologies employees use as consumers outside the office. Due to the rise of cloud computing, many Enterprise Platform vendors are redesigning their platforms to be suitable for deployment in the cloud by service providers. Generally this includes adding support for multi-tenancy, expanding scalability, improving high availability, and extending support for virtualization. In particular, Microsoft designed its latest Microsoft Exchange Server 2010 platform to be deployed as both an on-premises and a cloud-based platform for service providers. Over the past couple of years, there has been greater activity in the market in terms of mergers and acquisitions. Over the next several years, we expect still further market consolidation due to platform vendors finding it increasingly difficult to compete against Microsoft, which is now present in both the Enterprise and Service Provider segments, as well as the large number of legacy platform installed bases which represent attractive buyout targets. The proliferation of smartphone and tablet devices have made mobile support an important feature. Most subscribers want to be able to access their s from their mobile device at any time. Today, Microsoft ActiveSync has become an industry standard, and a must have for all platforms. Microsoft ActiveSync pushes s, calendars and contacts to popular mobile devices running Apple ios, Android, Windows Mobile, and others. Moreover, many platform vendors have also developed mobile browser pages optimized for mobile devices, as well as specialized apps for Apple ios, Android, RIM BlackBerry, and Windows Mobile devices. Figure 1, shows the total revenue growth of the Platforms market, including both Enterprise and Service Provider segments. The Platforms market will grow from nearly $5.5 billion in 2011 to over $6.5 billion by year-end Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 8

9 Figure 1: Worldwide Platforms Revenue Forecast ($M), Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 9

10 CHAPTER ONE MARKET ANALYSIS Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 10

11 1.1 MARKET DEFINITION platforms have evolved from delivering basic messages, to serving as the integration point for a wide variety of communication and collaboration technologies including; instant messaging (IM), mobility, web conferencing, team collaboration, social networking, and unified communications (UC). platforms are deployed either on-premises by Enterprises, or by Service Providers that offer cloud-based services to their subscribers. Enterprise Platforms Enterprises have traditionally deployed platforms on-premises as a way of delivering business and other collaboration tools to their employees. More recently, Enterprises, particularly in the SMB, Education, Government, and Retail sectors have started to move away from on-premise offerings in favor of cloud-based services, in order to reduce IT costs. Despite this, deployment of platforms on-premises continues to be the predominant form of deployment in the enterprise space. Platforms for Service Providers Service providers deploy platforms in order to offer services to their subscribers. Typically services are included as an addition to a wide range of other services. o Consumer-oriented service providers deliver experiences at no cost, as a way to increase the stickiness of their portals, and enrich the services they offer consumers. Typically, these service providers do not generate revenues directly from their services, but rather through advertisements, or bundled as part of an Internet access package. o Business-oriented service providers offer enterprise-grade functionality, which also includes security, mobility, and a wide range of other features aimed at business users. These services are paid for on a subscription basis, and represent a new revenue stream for service providers. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 11

12 platform vendors in this market develop platforms that suit the needs of both Enterprise and Service Provider customers, or develop platforms that are specialized in serving one or the other market. Irrespective of their deployment model, platforms today are designed to be accessed by many different types of clients: Desktop Clients provide end-users access to , contact, calendaring and task management features from a software application that is installed locally on the user s desktop. Desktop clients tend to integrate seamlessly with other applications, such as instant messaging (IM) and presence awareness, team collaboration, web conferencing, social networks, and unified communications (UC). Webmail Clients provide end-users access to , contacts, calendaring and task management features from a web browser. This allows end-users to easily access their s when they are away from their primary computers. Webmail clients have also become a cost-effective way for large organizations to extend access to employees who may not have had access to in the past. Mobile Clients End-users have multiple ways of accessing via their tablets or mobile devices. Most will access their s by setting up their accounts using an application or downloading an app on their mobile device. Generally, this involves setting up POP/IMAP access, Microsoft Exchange ActiveSync (EAS), or BlackBerry Enterprise Server (BES). Many end-users also access their s via their mobile device s mobile web browser using a web page optimized for mobile devices instead of their device s native client. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 12

13 1.2 MARKET SEGMENTATION The Platforms market is defined by two segments, as follows: Enterprise Platforms These are and collaboration platforms licensed and deployed by enterprise customers on-premises. Most of the products in this category provide much more than just and also include collaboration and groupware capabilities, such as instant messaging (IM) and presence awareness, mobile synchronization, social network integration, and more. Key players in this market include: IBM, Ipswitch, Microsoft, Novell, Open- Xchange, Oracle, Rockliffe, VMware Zimbra, and others. Platforms for Service Providers These are highly scalable platforms that are designed for demanding service provider environments, which can include hundreds of thousands to millions of subscribers. Service providers include: Internet Service Providers (ISPs), Telecommunication Providers (i.e. Telcos), Web Hosting Providers, Hosted Business Providers, and Application Service Providers (ASPs). Vendors in this market include: Ipswitch, Microsoft, Openwave Systems, Open-Xchange, Oracle, Rockliffe, VMware Zimbra, and others. Note: Many vendors in this space target both segments. This includes Ipswitch, Microsoft, Open-Xchange, Oracle, Rockliffe, VMware Zimbra, and others. Note: Educational institutions and government organizations that are deploying platforms on-premises are considered enterprise organizations for the purposes of this report. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 13

14 1.3 ENTERPRISE PLATFORMS KEY TRENDS AND ANALYSIS One Clear Leader The Enterprise Platforms segment is now dominated by one clear cut leader, Microsoft Exchange Server. Over the past couple of years, the platform s main competitors, IBM Lotus Notes/Domino and Novell GroupWise have continued to lose market share to Microsoft Exchange Server. Microsoft Exchange Server currently accounts for 52% of the market, which is expected to continue to grow over the next several years. Reasons for Microsoft s dominance in the market include customers desire to adopt Microsoft Exchange Server s cutting-edge technology, unifying their infrastructure under one software vendor, as well as tight integration with Microsoft Office and Microsoft SharePoint. Majority of Customers Still On-Premises - Over the past several years, Enterprise Platforms have been facing increasing competition from cloud-based services from Google and Microsoft. However not all organizations are confident with the cloud model yet. The majority of organizations still prefer to deploy platforms on-premises. These organizations enjoy the sense of ownership, security and control associated with on-premises platforms. Large organizations also have the available IT budget and resources to deploy and maintain an on-premise and collaboration infrastructure, as well as take advantage of economies of scale. o Instead of fully moving to the cloud, some organizations are opting for a hybrid solution, where only portion of their user mailboxes are in the cloud. Generally, these organizations will keep their mission critical mailboxes on-premises, while migrating less critical mailboxes to the cloud. While there is strong interest in hybrid solutions and vendors are actively promoting this model, to date, most organizations still prefer to either commit fully to the cloud, or leave all of their mailboxes onpremises. Designing for the Cloud In an effort to remain current with enterprise adoption of Software as a Service (SaaS), many Enterprise Platform vendors have been redesigning their platforms for the cloud. These vendors have fully Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 14

15 optimized their platforms for the cloud by adding greater support for scalability, high availability, multi-tenancy, and virtualization. o In particular, Microsoft designed its latest Microsoft Exchange Server 2010 platform as both an on-premises and a hosted platform for service providers. Other platform vendors are following suit with platforms that can be deployed as a hosted solution. Greater Activity in the Market Over the past couple of years, there has been greater activity in the market via acquisitions and mergers. In July 2010, Novell was acquired by Attachmate, while in January 2010, Zimbra was acquired by VMware. In 2009, RIM acquired Alt-N Technologies. Over the next several years, we expect greater consolidation in the market due to platform vendors finding it difficult to compete against Microsoft, as well as increasing competition from the cloud-based business services. Short Release Cycles Short release cycles have frustrated and forced many platform customers to seriously evaluate cloud-based solutions as a way to offload costly and time consuming migrations that occur every few years. Oftentimes, these short release cycles offer only incremental improvements, and do not provide an appreciable return on investment (ROI). Consumerization of IT Today s workforce is bringing in more technology from their daily, consumer lives into their organization; most notably , social networking sites, instant messaging, and mobile devices. This has led to the consumerization of many business applications, including . Users today expect to be able to use whatever devices or solutions they have in their daily lives, and do not want to be tied to any particular solution. This has forced platform vendors to support and integrate with many of the technologies employees use as consumers outside the office. In particular: o Mobile Access Today, more employees are on the move than ever. vendors are increasing the ability for these employees to access all their inbox data from any device, any platform, any browser, any location, at any time. Anywhere access has forced many platform vendors to focus on security and provisioning policies to help manage how the Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 15

16 information is used and stored on computers and mobile devices outside corporate firewalls. vendors will need to continue to keep up with an ever increasing range of mobile devices and computing platforms to ensure that data is always protected. o Social Network Capabilities The popularity of social networking sites, such as Facebook and Twitter, has lead many vendors to integrate these services into their solutions. Furthermore, many leading vendors have decided to build out their own social networking solutions for the business world, with tools such as activity streams, profile pages, document management, workspaces and others. We expect platforms to find new ways of further integrating social media into their platforms for improved productivity and reduced information overload. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 16

17 1.3.1 ENTERPRISE PLATFORMS CUSTOMER EVALUATION CRITERIA Customers looking for an Enterprise Platform today, should consider the following key capabilities: Granular Administration platforms should offer streamlined administrative tools for managing large number of mailboxes. Self-service features should also be included, since they allow end-users to complete basic mailbox administrative tasks themselves, thus providing the organization with considerable IT savings. High Availability (HA) and Disaster Recover (DR) platforms should offer high availability (HA) and disaster recovery (DR) capabilities for business continuity. These features ensure that there is no single point of failure at the disklevel, server-level, or datacenter-level. Security platforms should include advanced security to protect against spam and malware. Storage platforms should allow for large storage support to retain ever increasing volumes. Anywhere Access platforms must be able to synchronize all critical inbox data ( messages, calendars, contacts, and tasks) so that end-users can access their inbox at any time, from any device, and from any location. Additional Features - Additional features and capabilities that Enterprise Platforms should offer include: o Archiving and Compliance o Document Management o Encryption o Secure Instant Messaging (IM) o Integration with Business Social Networks o Web Conferencing o VoIP and Unified Communications (UC) Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 17

18 o Easy Integration with Business Applications, such as Customer Relationship Management (CRM) Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 18

19 1.3.2 ENTERPRISE PLATFORMS MARKET SHARE BY VENDOR Table 1, shows the installed base and revenue market share of the leading Enterprise Platform vendors, in The Enterprise Platforms segment is currently dominated by Microsoft, which currently has an installed base of 305 million mailboxes with its Microsoft Exchange Server platform. Even though Microsoft Exchange Server 2010 has not shown much uptake yet, the platform continues to steal market share away from IBM. By the end of 2011, the company is expected to release its second service pack, which adds Outlook Web App (OWA) Mini, Hybrid Configuration Wizard, Address Book Policies (GAL segmentation), and Outlook Cross Site Silent Redirection. Once a leader in this segment, IBM currently trails Microsoft with an installed base of 130 million mailboxes with its Lotus Notes/Domino platform. The company has continued to lose market share to Microsoft these past years, and this trend is expected to continue even with its next major release, IBM Lotus Notes/Domino Next in IBM Lotus Notes/Domino Next will focus on improving total cost of ownership (TCO) with optimization capabilities for the Lotus Domino server, as well as incorporating many elements from IBM s Project Vulcan framework, such as activity streams. Novell, once a major competitor to Microsoft and IBM, now has only an installed base of 25 million mailboxes. The technology gap between Novell GroupWise and Microsoft Exchange Server continues to grow, and the company seems more focused on serving its existing installed base than enhancing its Novell GroupWise platform. In 2011, Novell introduced the latest version of its platform, GroupWise 2012, which included web-based Apple ipad support, a redesigned WebAccess interface, calendaring enhancements, new capabilities for information sharing, and integrations with Novell Vibe and Skype. The rest of the Enterprise Platforms segment is primarily comprised of smaller vendors that primarily target government agencies, education and SMBs. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 19

20 Many of these vendors are facing increasing competition from cloud-based services, such as Google Apps and Microsoft Office 365. o CommuniGate Systems has an installed base of 20 million mailboxes, and has found much success within the education sector. The company focuses on servicing all other sectors of the market where Microsoft Exchange Server does not play in. In recent years, the company has been focusing on offering a cost effective unified communications (UC) package to SMBs. o The Oracle Communications Unified Communications Suite (formerly Sun Java System Communication Suite) has an installed base of 20 million mailboxes, and has been successful with Government Agencies and Universities. Since the acquisition of Sun Microsystems by Oracle in 2010, Oracle has integrated the Oracle Communications Unified Communications Suite into its Communications Global Business Unit, which primarily focuses on service providers. This may reduce the company s focus on the enterprise market. o Ipswitch has an installed base of 15 million mailboxes with its lightweight Microsoft Windows-based and collaboration platform targeted mainly at SMBs. In March 2011, Ipswitch released IMail Server v11.5, which adds new real-time whitelists, mailbox size report, performance counters, IM client and server, SSL configuration utility, new account harvesting prevention, and new password strength validation. o IceWarp has an installed base of 14 million mailboxes with its Microsoft Windows-based IceWarp Unified Communications Server. Over the past couple of years, the company has been trying to move upmarket, and has placed greater emphasis on unified communications (UC). o VMware Zimbra is a commercial open-source vendor that has accumulated an installed base of 10 million mailboxes with its Linuxbased platform. The acquisition of Zimbra by VMware in early 2010, should bring greater synergy between the Zimbra Collaboration Suite (ZCS) and VMware s virtualization software, as well as open up new channels for the Zimbra Collaboration Suite (ZCS). Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 20

21 o Alt-N Technologies, a subsidiary of RIM, has accumulated 5 million mailboxes. In February 2011, the company released MDaemon Messaging Server, BlackBerry Edition. This release adds BlackBerry Enterprise Server (BES) support to its MDaemon Messaging Server. o Atmail is a fairly small player in the market, with 4 million mailboxes. The company offers a Linux-based and collaboration platform primarily to SMBs. In late 2011, Atmail released Atmail Server 6.3, which offers a new CalDAV and CardDAV servers. o Open-Xchange is a commercial open-source software company that has an installed base of 3 million mailboxes. The company initially started out as an enterprise platform, however, it has refocused on providing platforms for service providers in recent years. o Gecad Technologies is a fairly new player in this segment, and currently has an installed base of 1 million mailboxes with its AXIGEN platform. The company has found success with the open-source community and SMBs in the European regions. This past year, the company released AXIGEN 8.0, which introduces a number of new client-side features, a new AJAX-based webmail interface, and new enhanced features to its Microsoft Outlook connector. o Rockliffe (formerly MailSite Software) has an installed base of 1 million mailboxes with its lightweight Microsoft Windows-based and collaboration platform MailSite Fusion targeted at SMBs. This past year, the company released MailSite Fusion 9.5, which adds a number of performance enhancements to its webmail client ExpressPro, a new Share Contact Directory, and improved Calendar and Contact Sharing features. It also expands MailSite s ActiveSync capabilities, provides new multiple ports per service support, and new whitelist capabilities. o Kerio Technologies has an installed base of 1 million mailboxes. The platform has found success with advertising and marketing verticals that primarily use Apple Macs. In May 2011, Kerio released Kerio Connect Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 21

22 7.2, which added native support for Microsoft Outlook 2011 for Mac users. Others accounts for nearly 6% of the installed base market share, and includes the following types of solutions: o Legacy mail systems, which are platforms that are no longer sold, and therefore do not contribute to the revenue of others. o Smaller players, which are often regional niche vendors that hold very small installed bases. o Freeware messaging platforms, typically built off of free open-source mail transfer agents (MTA) such as Exim, Postfix, qmail, Sendmail, and others. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 22

23 Vendor Alt-N Technologies (RIM) Solution Mdaemon Messaging Server Installed Base (M) IB % Revenues ($M) Revenue % 5 0.9% $5 0.11% Atmail Atmail 4 0.7% $3 0.06% CommuniGate Systems Gecad Technologies MessagePlus, VoicePlus % $ % AXIGEN 2 0.3% $1 0.02% IBM Lotus Notes/Domino % $1, % IceWarp IceWarp Unified Communications Server % $5 0.11% Ipswitch IMail Server % $6 0.13% Kerio Technologies Kerio Connect 1 0.2% $5 0.11% Microsoft Exchange Server % $3, % Novell GroupWise % $ % Open- Xchange Oracle Open-Xchange 3 0.5% $3 0.06% Oracle Communications Unified Communications Suite % $ % Rockliffe MailSite Fusion 1 0.2% $1 0.02% VMware Zimbra VMware Zimbra Collaboration Suite % $ % Others % $ % Total % $4, % Table 1: Enterprise Platforms Market Share by Vendor, 2011 Note: The installed base figures in the table above only include active Enterprise Platforms mailboxes. We define active mailboxes as mailboxes that have been accessed at least once in the last three months. These numbers also do not include mailboxes sold to service providers. Those are discussed in the following sections. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 23

24 Figure 2, shows the installed base market share of the leading Enterprise Platform vendors, in Figure 2: Enterprise Platforms IB Market Share, 2011 Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 24

25 Figure 3, shows the revenue market share of the leading Enterprise Platform vendors, in Figure 3: Enterprise Platforms Revenue Market Share, 2011 Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 25

26 1.3.3 ENTERPRISE PLATFORMS FORECAST Table 2, shows the installed base and revenue forecast for the Enterprise Platforms segment, from 2011 to In 2011, the worldwide installed base of the Enterprise Platforms segment accounts for 585 million mailboxes, and is expected to reach 749 million mailboxes by year-end This represents an average annual growth rate of 6% over the next four years. The worldwide revenue of the Enterprise Platforms segment is expected to grow from $4.7 billion in 2011 to over $5.2 billion by year-end This represents an average annual growth rate of 3% annually over the next four years. Revenue growth is minimal in this market due to commodization and continuous price erosion deriving from cloud-based services Enterprise Platforms Mailboxes (M) % Change 6% 6% 6% 6% Worldwide Revenue ($M) $4,720 $4,814 $4,934 $5,089 $5,242 % Change 2% 2% 3% 3% Table 2: Enterprise Platforms IB & Revenue Forecast, Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 26

27 Figure 4, shows the revenue forecast for the Enterprise Platforms segment, from 2011 to Figure 4: Enterprise Platforms Revenue Forecast, Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 27

28 1.3.4 ENTERPRISE PLATFORMS INSTALLED BASE BY REGION Table 3, shows the forecasted installed base distribution of the Enterprise Platforms segment by region, from 2011 to Asia Pacific currently leads the market, accounting for 45% of on-premises enterprise mailboxes in Asia Pacific is the most populous region in the world, and is home to the large emerging economies of China and India. Growth in this region is expected to rapidly increase over the next four years. By year-end 2015, Asia Pacific is expected to account for 51% of Enterprise Platforms mailboxes. Europe follows Asia Pacific, and accounts for 24% of Enterprise Platforms in The European region has shown the most reluctance to cloud-based services. Most organizations in this region prefer to keep their data on-premises. The region has also shown more interest in open-source and collaboration platforms. By year end 2015, we expect Europe to account for 21% of Enterprise Platforms mailboxes. Growth in this region will be driven mainly by the developing regions in Eastern Europe. In 2011, North America accounts for 18% of Enterprise Platforms mailboxes, and is expected to account for 15% of Enterprise Platforms mailboxes by year-end North America is a relatively saturated market, with most of the growth coming from the extension of services to employees that did not have in the past, such as retail workers. A strong interest in cloudbased services, such as Google Apps and Microsoft Office 365, will slow the adoption of Enterprise Platforms mailboxes over the next four years. Rest of World (RoW) accounts for 13% of Enterprise Platforms mailboxes in 2011, and is expected to remain at 13% over the next four years. Growth in this region will be driven by developing regions, such as Latin America and the Middle East. However, these regions are also seeing a rise in adoption of cloudbased business solutions as a viable alternative to Enterprise Platforms. Many of the organizations in this region have not yet built up a legacy infrastructure, which makes cloud-based services very attractive. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 28

29 Enterprise Platforms Mailboxes North America % North America 18% 17% 17% 16% 15% Europe % Europe 24% 23% 23% 22% 21% Asia Pacific % Asia Pacific 45% 46% 48% 50% 51% Rest of World % Rest of World 13% 13% 13% 13% 13% Table 3: Enterprise Platforms IB by Region, Figure 5, shows the installed base distribution for the Enterprise Platforms segment by region, in 2011 and Figure 5: Enterprise Platforms IB by Region, 2011 & 2015 Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 29

30 1.3.5 ENTERPRISE PLATFORMS INSTALLED BASE BY BUSINESS SIZE Table 4, shows the forecasted installed base distribution for the Enterprise Platforms segment broken down by business size, from 2011 to o Note: We define organization size according to the following scale: Small (1-100 Employees) Medium (101-1,000 Employees) Large (1,001-10,000 Employees) Very Large (Over 10,000 Employees) Small Organizations represent the majority of enterprise mailboxes, and currently account for 31% of total enterprise mailboxes deployed in By year-end 2015, we expected Small Organizations to account for 32% of enterprise mailboxes. Growth in this space will be limited over the next four years, as many Small Organizations are expected to choose cloud-based services, such as Google Apps and Microsoft Office 365, over deploying an Enterprise Platform. In 2011, Medium-sized Organizations account for 26% of enterprise mailboxes, and are expected to remain at 26% over the next four years. Much like Small Organizations, many Medium-sized Organizations are also considering the advantages of cloud-based services over Enterprise Platforms. Large Organizations account for 26% of enterprise mailboxes in By yearend 2015, this figure is expected to account for 25% of on-premises mailboxes. Large organizations continue to prefer to deploy Enterprise Platforms, as they provide greater data privacy and scalability, which allows them to take advantage of economies of scale. Very Large Organizations account 17% of enterprise mailboxes in Over the next four years, this figure is expected to remain virtually unchanged. Very Large Organizations generally have demanding customization requirements for their Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 30

31 infrastructure, which are still better met by Enterprise Platforms than cloudbased services Enterprise Platforms Mailboxes Small (1-100 Employees) % Small 31% 31% 32% 32% 32% Medium (101-1,000 Employees) % Medium 26% 26% 26% 26% 26% Large (1, Employees) %Large 26% 26% 25% 25% 25% Very Large (10,000+ Employees) % Very Large 17% 17% 17% 17% 17% Table 4: Enterprise Platforms IB by Business Size, Figure 6, shows the installed base distribution for the Enterprise Platforms segment by business size, in 2011 and Figure 6: Enterprise Platforms IB by Business Size, 2011 & 2015 Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 31

32 Alt-N Technologies Atmail CommuniGate Gecad Technologies IBM Lotus IceWarp Ipswitch Kerio Microsoft Novell Open-Xchange Oracle Rockliffe VMware Zimbra PLATFORMS MARKET FORECAST, FEATURE COMPARISON OF ENTERPRISE PLATFORMS Table 5, provides a feature overview of leading Enterprise Platforms. Operating System Microsoft Windows X X X X X X X X X X Linux X X X X X X X X X X Unix X X Mac OS X X X X Others X X X X X X Client Access POP3/IMAP4 X X X X X X X X X X X X X X Outlook Connector X X X X X X X X X X X X X X Apple Mac OS X X X X X X X X X Webmail AJAX X X X X X X X X X X X X X X Mobility ActiveSync X X X X X X X X X X X X X BES X X X X X X Other*** X X X X X X X X X X X X X Groupware X X X X X X X X X X X X X X Features Instant Messaging X X X X X X X X X VoIP X X X X X X X Archiving X X X X X X X X X X X X X Anti-virus/Spam Filtering X X X X X X X X X X X X X X Table 5: Enterprise Platforms - Feature Comparison, 2011 X = included * IBM Lotus Notes/Domino and Novell GroupWise both have native Mac OS X clients. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 32

33 1.3.7 MICROSOFT EXCHANGE SERVER DEPLOYMENT BY VERSION Table 6, shows the enterprise on-premise deployment of Microsoft Exchange Server by version, forecasted from 2011 to In the past, many organizations decided to remain on Microsoft Exchange Server 2003, instead of moving to Microsoft Exchange Server 2007, due to its demanding system requirements. However, Microsoft Exchange Server 2007 is currently the most deployed version of Microsoft Exchange Server worldwide, accounting for 54% of total Exchange deployments in By year-end 2015, we expect Microsoft Exchange Server 2010 to account for 27% of total Exchange deployments as Microsoft pushes forward with Microsoft Exchange Server In 2011, Microsoft Exchange Server 2003 accounts for 30% of total Exchange deployments. Over the next four years, we expect to see these organizations either migrate to Hosted Exchange services or make the transition to Microsoft Exchange Server By year-end 2015, Microsoft Exchange Server 2003 deployments are expected to account for 17% of total Exchange deployments. Released in November 2009, Microsoft Exchange Server 2010 builds on top of many of the features introduced in Microsoft Exchange Server To date, however, uptake of Microsoft Exchange Server 2010 has been slow due to the slow economic conditions, the lack of a must have feature, and the short release cycle between Microsoft Exchange Server 2007 and Microsoft Exchange Server However, we do expect uptake of Microsoft Exchange Server 2010 to reach 54% of total Exchange deployments by year-end Microsoft Exchange Server 2000 and its predecessor still account for 7% of Exchange deployments in These legacy versions of Microsoft Exchange Server are primarily deployed today by SMBs, typically in Rest of the World (RoW). Eventually, we expect these organizations to migrate over to Hosted Exchange solutions, particularly because extended support for Microsoft Exchange Server 2000 has already expired at the beginning of By year-end 2015, we expect Microsoft Exchange Server 2000 and its predecessor to account for only 1% of total Exchange deployments. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 33

34 Microsoft Exchange Mailboxes (M) Exchange Server 2000 (& Earlier) % Exchange Server 2000 (% Earlier) 7% 5% 4% 2% 1% Exchange Server % Exchange Server % 28% 23% 20% 17% Exchange Server % Exchange Server % 44% 38% 32% 27% Exchange Server % Exchange Server % 23% 34% 44% 54% Table 6: Microsoft Exchange Server IB by Version, Figure 7, shows the on-premises enterprise deployment of Microsoft Exchange Server by version, in 2011 and Figure 7: Microsoft Exchange Server IB by Version, 2011 & 2015 Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 34

35 1.3.8 IBM LOTUS DOMINO DEPLOYMENT BY VERSION Table 7, shows the enterprise on-premise deployment of IBM Lotus Notes/Domino by version, forecasted from 2011 to IBM Lotus Domino 8.x is currently the most deployed version of IBM Lotus Domino, accounting for 55% of worldwide IBM Lotus Domino deployments. The latest major release, IBM Lotus Domino 8.5, has shown one of the fastest adoption rates the company has ever seen for its and collaboration platform. By year-end 2015, IBM Lotus Domino 8.x is expected to account for 58% of worldwide IBM Lotus Domino deployments. In 2011, IBM Lotus Domino 7.x accounts for 30% of IBM Lotus Domino deployments. IBM Lotus Domino 7.x received limited uptake due to the lack of major innovative features it offered over its predecessor. By year-end 2015, IBM Lotus Domino 7.x is expected to account for 14% of IBM Lotus Domino deployments. IBM Lotus Domino 6.x and its predecessors still account for 15% of the Lotus Domino deployments. There is still a large number of legacy versions of IBM Lotus Domino due to the platform s strong backward compatibility, which allows organizations to run new versions of the platform alongside legacy versions of the platform. However, by year-end 2015, we expect legacy versions of IBM Lotus Domino to only account for 3% of IBM Lotus Domino deployments. Announced at Lotusphere 2011, Next is the codename for the next major release of Lotus Domino. Early code of IBM Lotus Notes/Domino Next will be dropped into LotusLive Notes in late 2011 or early The final release of IBM Lotus Notes/Domino Next is expected to occur some time in By year-end 2015, we expect Lotus Domino to account for 24% of Lotus Domino deployments. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 35

36 IBM Lotus Domino Mailboxes (M) Lotus Domino 6.x (& Earlier) % Lotus Domino 6.x (& Earlier) 15% 14% 12% 8% 3% Lotus Domino 7.x % Lotus Domino 7.x 30% 26% 23% 19% 14% Lotus Domino 8.x % Lotus Domino 8.x 55% 56% 57% 58% 58% Lotus Domino Next N/A % Lotus Domino Next 4% 8% 15% 24% Table 7: IBM Lotus Notes/Domino IB by Version, Figure 8, shows the on-premise enterprise deployment of IBM Lotus Notes/Domino by version, in 2011 and Figure 8: IBM Lotus Notes/Domino IB by Version, 2011 & 2015 Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 36

37 1.4 PLATFORMS FOR SERVICE PROVIDERS Platforms for Service Providers are highly scalable and reliable platforms that allow service providers to deliver hosted services to their subscribers. Over the past several years, service providers have expanded their services beyond by adding more advanced capabilities for communications and collaboration, such as groupware, instant messaging (IM), social networking, and mobile support. The Platforms for Service Provider segment is characterized by the following types of platform solutions: Commercial Platforms: offer a level of scalability, reliability, and robustness, which for the most part, cannot easily be developed in-house. Popular Commercial Platforms include CommuniGate Pro, Critical Path Memova Messaging, Microsoft Exchange Server, Openwave Systems Mx, Open- Xchange Hosting Edition, Oracle Communications Suite, VMware Zimbra, and many others. Freeware Platforms: are built on open source code and freeware message transfer agent (MTA) such as Exim, qmail, Postfix, and Sendmail. Freeware Platforms have the advantage of low costs, and are typically deployed by small service providers. Proprietary Platforms: are developed in-house by large ISPs and Portals for their subscribers. Popular ISP/Webmail services built on Proprietary Platforms include Google Gmail, Microsoft Windows Live Hotmail, and Yahoo! Mail. These different types of platform solutions are deployed by service providers as follows: Hosted Business Providers: offer cloud-based services that provide reliable and robust enterprise-grade and collaboration functionality aimed at business users. These providers deploy Commercial Platforms that offer enterprise-grade and collaboration features, aimed at business users. Some Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 37

38 small Hosted Business Providers have built their own Proprietary Platforms, or offer a service based on freeware MTAs. ISP/Webmail Providers: ISP/Webmail Providers are Internet Service Providers (ISPs), Telecommunication Providers (Telcos), Web Hosting Providers, and Web Portals that target consumer subscribers. These service providers typically offer webmail services as part of a broader service offering, which may include Internet access, Web hosting, virtual private networks (VPNs), domain registration, content services, etc. Large Portals and ISPs (e.g. Google, Microsoft, Yahoo! and others) often develop their own in-house Proprietary Platforms, however, many ISP/Webmail Providers choose to deploy Commercial Platforms for their manageability. Freeware Platforms are also deployed, typically by small and mid-size ISP/Webmail providers in emerging regions. Usually these providers migrate to Commercial Platforms as their subscriber base grows and their needs evolve. Table 8, shows how the different types of platforms map to different kinds of service providers: Service Provider Market Hosted Business Providers Platform Type Freeware Platforms (Typically Smaller Hosted Business Providers) Commercial Platforms (Typically Medium and Large Hosted Business Providers) Proprietary Platforms (Typically Tier 1 ISPs) ISP/Webmail Providers Freeware Platforms (Typically Tier 2, 3, and 4 ISPs) Commercial Platforms (Tier 1, 2, 3, and 4 ISPs) Table 8: Platforms for Service Providers by Type, 2011 Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 38

39 PLATFORMS FOR SERVICE PROVIDERS EVALUATION CRITERIA Service Providers looking for an Platform, today, will consider the following key capabilities: Scalability A high performing platform must be able to offer high message throughput and support a large number of users. platforms must be able to scale up and scale out. Scaling up (also known as vertical scaling) refers to increasing scalability by maximizing hardware usage, via improved processing, memory, and storage disks. Scaling out (also known as horizontal scaling) refers to increasing scalability by adding more machines to the system, either by clustering or service separation. Highly performing platforms are in high demand, as they allow service providers to host a larger number of users on a single server, thereby keeping the total cost of ownership (TCO) low, while increasing revenue generation potential. Reliability This refers to the ability of an platform to offer high availability (HR). This is a major concern for service providers, who are usually accountable for business continuity through stringent Service Level Agreements (SLAs). Fault tolerant and disaster recover (DR) technologies must be included in the platforms to reduce downtime and protect against unexpected system failures or disaster. Health monitoring tools should also be included that report data to service providers, helping them to avoid critical situations. Moreover, service providers should be able to update their platforms without taking down the entire system. Multi-Tenancy Multi-tenant platforms are typically designed differently from enterprise on-premises platforms. In a multi-tenant environment, service providers can serve multiple customers on a single server (using the same applications, same operating system, and same hardware), with each customer s data and configuration stored on separate virtual partitions. This ensures economies of scale, and also allows service providers to reduce costs and pass on savings to customers. However, not all platforms are designed for multitenancy, which forces service providers to deploy less efficient configurations. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 39

40 Integration with Billing and Provisioning Many service providers have already made significant investments in their billing and provisioning systems. Service providers are increasingly demanding that their platforms integrate with their existing billing and provisioning systems. Currently, many platform vendors provide APIs that help synchronize subscriber data with service providers existing user management systems. Subscriber Features Increased competition among service providers is leading providers to include an ever growing number of features and services beyond basic . Today these include: o Additional Storage o Security (Anti-Virus and Spam Filtering Protection) o Archiving and Compliance o Groupware (Shared Calendaring, Shared Contacts, and other Personal Productivity Tools) o Instant Messaging (IM) o Voice and Video Chat o Social Networking Integration o Mobile Support o Unified Communications (UC) Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 40

41 PLATFORMS FOR SERVICE PROVIDERS TRENDS AND ANALYSIS Market Stagnation Many of the major players in this segment have become comfortable with just servicing their current installed base, instead of innovating with new technology or features. Only a handful of vendors are making major noise in this market. Many of the sales in this market are replacement sales, where service providers are replacing a legacy platform with another platform from another vendor. Greater Consolidation The market stagnation has lead to several acquisitions and mergers of Commercial Platform vendors over the past couple of years. These market activities have helped transform the landscape of the Platforms for Service Providers segment. In January 2010, Sun Microsystems was acquired by Oracle, while Zimbra was acquired by VMware. In July 2010, two veterans in the market, Critical Path and Mirapoint merged. Over the next year, we expect greater consolidation of the market to occur due to the large number of legacy platform vendors that remain in this segment with solid installed bases. Monetizing Installed Base Most service providers offer services for free as part of a broader range of services they offer, but many service providers want to look at ways to monetize a portion of their installed bases. An increasing number of service providers have monetized their installed base by charging for premium services, such as security, mobile synchronization, and archiving. We expect that when it comes time to replacing their servers, service providers will choose an platform vendor that offers the opportunity to monetize premium services. Enterprise Platform Vendors Redesigning Their Platforms for the Cloud Due to the rise of cloud computing, many Enterprise Platform vendors are redesigning their platforms to meet the demanding requirement of service provider environments. Generally this includes adding support for multi-tenancy, expanding scalability, improving high availability, and extending support for virtualization. All these features allow service providers to deploy a reliable and robust cloud-based service for a large number of subscribers without too Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 41

42 much difficulty. Today, the most popular Enterprise Platform being pushed to the cloud is Microsoft Exchange Server. The release of Microsoft Exchange Server 2010 Service Pack 1 finally added a native hosting capability component, which simplifies the deployment of Microsoft Exchange Server in the cloud. Mobile Support - The proliferation of smart phone and tablet devices have made mobile support an important feature. Most subscribers want to be able to access their s from their mobile device at any time. Today, Microsoft ActiveSync has become an industry standard, and a must for all platforms. Microsoft ActiveSync pushes s, calendars and contacts from a subscriber s account to popular mobile devices running Apple ios, Android, Windows Mobile, and others. Moreover, many platform vendors have also developed mobile browser pages optimized for mobile devices, as well as specialized apps for Apple ios, Android, RIM BlackBerry, and Windows Mobile devices that allow mobile users to easily access , calendars, contacts, and other essential data or services. Social Network Integration Social Networking sites have become a vital part of everyday Internet usage. The increased popularity of social networks has pushed many platforms to integrate with social networking sites, such as Facebook, Twitter, and LinkedIn. Generally, platform vendors connect to a subscriber s social networking accounts. Via the vendor s webmail client, subscribers can view all their social networking sites activities and news feeds in one location. Subscribers can also update their status from within the webmail client. Moreover, many platform vendors also synchronize social network contacts and calendars with a subscriber s existing data. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 42

43 PLATFORMS FOR SERVICE PROVIDERS MARKET SHARE Table 9, shows the installed base and revenue market share of the leading Platform for Service Providers vendors, in Oracle, Openwave and Critical Path have traditionally targeted large consumeroriented Tier 1 service providers that require highly reliable and scalable solutions. o Oracle currently has an installed base of 175 million mailboxes in this space. In January 2010, Oracle completed the acquisition of Sun Microsystems, a veteran platform vendor that has had much success with consumer-oriented Tier 1 service providers. So far, the acquisition has helped open new channels for the Oracle Communications Unified Communications Suite (formerly known as the Sun Java System Communications Suite). o Openwave was an early entrant into this market, and has grown its installed base to 165 million mailboxes. Unlike many of its competitors, the company continues to innovate and implement new technology into their platform rather than just supporting their existing customer base. o Critical Path is another longtime player in the Platforms for Service Provider space that has been around since the late 1990s. In October 2010, Critical Path merged with another veteran in the market, Mirapoint Software. Together, the combined company will operate as Critical Path and currently has an installed base of 150 million mailboxes. CommuniGate Systems has found much success targeting service consumeroriented Tier 2 and Tier 3 service providers, as well as service providers in emerging regions. Over the past several years, the company has been pushing their CommuniGate Pro platform to business-oriented service providers via two packages; UC Centex for service providers looking to offer unified communications (UC) and MobileOffice for service providers looking to provide cost effective mobile synchronization services. The company has accumulated an installed base of 100 million mailboxes. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 43

44 VMware Zimbra is an emerging player that has found early success with consumer-oriented service providers, as well as with business-oriented providers looking for a Microsoft Hosted Exchange alternative. The acquisition of Zimbra by VMware in 2010 has created greater synergy between the Zimbra Collaboration Suite (ZCS) and VMware s virtualization software, and has also helped to open up new channels for the VMware Zimbra Collaboration Suite (ZCS). Since its entry into the market in 2004, this commercial open-source vendor has quickly accumulated an installed base of 60 million mailboxes. Open-Xchange is another commercial open-source vendor that has seen growing success in this market. Since the company began focusing their attention on the Platforms for Service Providers segment in 2006, it has partnered with a large number of service providers, primarily in the European region. The company also offers a compelling upsell strategy, where service providers can provide basic services for the majority of subscribers, while charging business users for more premium services, such as groupware, Microsoft Outlook access, Microsoft ActiveSync support, and others. Open-Xchange has accumulated an installed base of 40 million mailboxes with its Open-Xchange Hosting Edition solution. Microsoft targets business-oriented service providers with its popular Exchange Server platform, and has accumulated 39 million mailboxes with its Hosted Exchange solutions. Over the past couple of years, Microsoft has been placing greater emphasis on this segment. In late 2009, the company released Microsoft Exchange Server 2010, which was designed from the ground up as a platform for service providers. IceWarp, Atmail, Ipswitch, Rockliffe, Gecad Technologies, and Kerio primarily play in the lower end of the market. These platform vendors typically offer their platforms to business-oriented Tier 3 and Tier 4 service providers. We expect these players to accumulate some more installed base as service providers migrate away from Freeware Platforms with basic services to more robust, feature-rich platforms. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 44

45 Others still accounts for about 69% of the installed base market share, and as discussed earlier includes the following types of solutions: o Freeware Platforms, which are often built on open source and freeware message transfer agents (MTA) such as Exim, qmail, Postfix, and Sendmail. Freeware platforms have the advantage of low costs, and are deployed mainly by Tier 3 and Tier 4 service providers. o Proprietary Platforms, which have generally been developed inhouse by large ISPs and Portals for use by their own subscribers. Popular ISPs deploying proprietary platforms include Google Gmail, Microsoft Windows Live Hotmail, and Yahoo! Mail. o Other small Commercial Platforms, which offer basic messaging platforms to small regional or vertically-oriented Portals, ISPs, Web Hosting providers and others. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 45

46 Vendor Solution Installed Base (M) IB % Revenue ($M) Revenue % Atmail Atmail Server % $3 0.4% CommuniGate UC Centrex, Mobile Office % $18 2.4% Critical Path Memova Messaging, Mirapoint Message Server % $55 7.3% Gecad AXIGEN 7 0.3% $1 0.1% IceWarp IceWarp Unified Communications Server % $3 0.4% Ipswitch IMail Server 8 0.3% $2 0.3% Kerio Technologies Kerio Connect % $1 0.1% Microsoft Exchange Server % $ % Openwave Mx % $40 5.3% Open-Xchange Open-Xchange HE % $7 0.9% Oracle Oracle Communications Unified Communications Suite % $42 5.6% Rockliffe MailSite Fusion 8 0.3% $3 0.4% VMware Zimbra VMware Zimbra Collaboration Suite % $20 2.6% Others Others 1, % $57 7.5% Total 2, % $ % Table 9: Platforms for Service Providers IB & Revenue Market Share, 2011 Note 1: The installed base figures in the table above only include active mailboxes. We define active accounts, as accounts which have been accessed at least once in the last three months. Note 2: The table above represents platforms deployed by both consumer and business service providers. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 46

47 Figure 9, shows the installed base market share of leading Platforms for Service Providers, in The others group counts for about 68% of the installed base. However, since most of these are Freeware Platforms, Proprietary Platforms, along with very low-end Commercial Platforms, it represents only about 8% of the revenue market share. The top three market players, Oracle Corporation, Openwave Systems, and Critical Path, represent a 20% installed base market share, and 18% of total revenues in the segment. All three players have a long history in this market, and have successfully built up their customer base with large consumer-oriented Tier 1 service providers. Microsoft currently accounts for only 2% of the Platforms for Service Provider market, but accounts for 67% of the revenue market share due to the relatively higher licensing fees it charges service providers compared to its competitors. Figure 9: Platforms for Service Providers IB Market Share, 2011 Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 47

48 Figure 10, shows the revenue market share of the leading Platforms for Service Providers, in Figure 10: Platforms for Service Providers Revenue Market Share, 2011 Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 48

49 PLATFORMS FOR SERVICE PROVIDERS FORECAST Table 10, shows the installed base and revenue forecast for the Platforms for Service Providers segment, from 2011 to The worldwide installed base for the Platform for Service Providers segment is nearly 2.5 billion mailboxes, and is expected to increase to nearly 3.2 billion mailboxes by year-end This represents an average annual growth rate of 7%. Growth in this market will be driven by the greater penetration of Internet users in the developing regions of Eastern Europe, Asia, Latin America, and the Middle East. In 2011, the worldwide revenue for the Platform for Service Providers segment is $755 million. This figure is expected to grow to $1.3 billion by yearend Microsoft accounts for the majority of revenues in this market, since it focuses business-oriented service providers, which generally pay a much higher licensing fee than consumer-oriented service providers. Platforms for Service Providers IB (M) & Revenue ($M), Worldwide Installed Base (M) 2,512 2,700 2,884 3,072 3,263 % Change 7% 7% 7% 6% Worldwide Revenue ($M) $755 $937 $1,083 $1,213 $1,328 % Change 24% 16% 12% 9% Table 10: Platforms for Service Providers IB & Revenue Forecast, Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 49

50 Figure 11, shows the revenue forecast of the Platforms for Service Providers market, from 2011 to Figure 11: Platforms for Service Providers Revenue Forecast ($M), Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 50

51 PLATFORMS FOR SERVICE PROVIDERS INSTALLED BASE BY REGION Table 11, shows the forecasted installed base distribution of Platforms for Service Providers by region, from 2011 to Asia Pacific leads the Platforms for Service Provider segment with a relative market share of 47% in Asia Pacific is the most populated region in the world, and is home to nearly half of all worldwide Internet users. The majority of mailboxes in this region are freeware or proprietary solutions developed by Portals and ISPs. By year-end 2015, Asia Pacific will account for 52% of worldwide mailboxes, as Internet access continues to penetrate into the developing economies of China, India, and Southeast Asia. In 2011, Europe accounts for 22% of worldwide mailboxes in this segment. By year-end 2015, Europe is expected to account for a relative market share of 20%, due to the fact that Western Europe is fairly saturated. Growth in the region will be driven by developing markets in Eastern Europe. North America accounts for 18% of worldwide mailboxes in the Platforms for Service Provider segment in Due to the high level of saturation in the region, North America will only account for 15% of mailboxes in this segment by year-end Rest of World (RoW) accounts for a relative market share of 14% in the Platforms for Service Provider segment. RoW has strong potential for growth; however, many countries in RoW still lack a solid infrastructure to support Internet access. By year-end 2015, RoW will account for 13% of worldwide mailboxes in this segment. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 51

52 Platforms for Service Providers IB (M) Breakout by Region, Platforms for Service Providers IB (M) 2,512 2,700 2,884 3,073 3,263 North America % North America 18% 17% 16% 16% 15% Europe % Europe 22% 21% 21% 20% 20% Asia Pacific 1,173 1,305 1,439 1,575 1,713 % Asia Pacific 46% 48% 50% 51% 52% RoW % RoW 14% 14% 13% 13% 13% Table 11: Platforms for Service Providers IB Breakout by Region, Figure 12, shows the forecasted installed base distribution of the Platforms for Service Providers segment by region, in 2011 and Figure 12: Platforms for Service Providers IB Breakout by Region 2011 & 2015 Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 52

53 PLATFORMS FOR SERVICE PROVIDERS REVENUE BY REGION Table 12, shows the forecasted revenue distribution of the Platform for Service Providers market by region, from 2011 to Over the next four years, the distribution of the platform type used by service providers will change drastically. Freeware Platforms and Proprietary Platforms used by most ISP/Webmail providers will be increasingly displaced by more expensive, Commercial Platforms. Moreover, many service providers will be adopting business-oriented Commercial Platforms, such as Microsoft Exchange Server. These platforms add premium services (such as groupware capabilities, mobile synchronization, and social networking features), which are targeted at business end-users and generate more revenues for both the platform vendor and the service provider. North America and Europe have a higher price per seat cost than Asia Pacific and Rest of the World. Most ISP/Webmail providers in these regions have adopted a Commercial Platform for their subscriber base. However, the majority of revenues in this segment are driven by the increased adoption of Commercial Platforms that offer business capabilities, specifically Microsoft Exchange Server. The price per seat cost in Asia Pacific and Rest of World (RoW) remains very low, due to the large percentage of service providers in the region still deploying Freeware or Proprietary Platforms. Freeware and Proprietary Platforms generate no revenues since they are typically developed on open-source code that is widely available free of charge. In addition, most Commercial Platform vendors generally charge service providers in this region a lower price per seat, since these service providers generally offer greater volume than their counterparts in North America and Europe. However, most service providers in this region only offer basic services, and rarely offer more advanced features for business subscribers. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 53

54 Platform for Service Providers Revenue ($M) Breakout by Region, Platforms for Service Providers Revenue ($M) $755 $937 $1,083 $1,213 $1,328 North America $254 $304 $339 $373 $399 % North America 34% 33% 32% 31% 30% Europe $206 $256 $296 $330 $360 % Europe 27% 27% 27% 27% 27% Asia Pacific $158 $208 $254 $296 $332 % Asia Pacific 21% 22% 23% 24% 25% RoW $137 $169 $194 $214 $237 % RoW 18% 18% 18% 18% 18% Table 12: Platforms for Service Providers Revenue Breakout by Region ($M), Figure 13, shows the forecasted revenue distribution of the Platform for Service Providers market by region, in 2011 and Figure 13: Platforms for Service Providers Revenue Breakout by Region, 2011 & 2015 Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 54

55 PLATFORMS FOR SERVICE PROVIDERS BY PLATFORM TYPE Table 13, shows the breakout of Platform for Service Providers by platform type, from 2011 to Proprietary Platforms account for nearly half of the Platforms for Service Providers segment; the majority of these are consumer mailboxes from Google Gmail, Microsoft Windows Live Hotmail, and Yahoo! Mail. In 2011, Proprietary Platforms account for 48% of service provider mailboxes. This figure is expected to reach 51% by year-end Growth of Proprietary Platforms will be driven by increased Internet penetration in emerging markets, such as China, India, Southeast Asia, Eastern Europe, Latin America, and the Middle East. Commercial Platforms are becoming increasingly more popular, as they allow service providers to quickly replace aging Freeware Platforms and Proprietary Platforms. However, there is a lot of turnover in this market, and many service providers continue to replace an existing, legacy Commercial Platform with another Commercial Platform that better suits their needs. In 2011, Commercial Platforms account for 34% of service provider mailboxes, and are expected to reach 36% of the market by year-end Freeware Platforms account for 18% of service provider mailboxes in 2011, and are expected to only account for 13% of service provider mailboxes by year-end In the past, Freeware Platforms were widely deployed, since they were relatively inexpensive. However, Freeware Platforms are increasingly being replaced by Commercial Platforms, as service providers experience scalability and feature limitations. Today, Freeware Platforms are mainly deployed by Tier 3 and Tier 4 service providers. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 55

56 Platforms for Service Providers IB (M) Breakout by Platform Type, Platforms for Service Providers IB (M) 2,512 2,700 2,884 3,073 3,263 Commercial (M) ,007 1,086 1,170 % Commercial 34% 35% 35% 35% 36% Proprietary (M) 1,206 1,328 1,444 1,560 1,680 % Proprietary 48% 49% 50% 51% 51% Freeware (M) % Freeware 18% 16% 15% 14% 13% Table 13: Platforms for Service Providers IB Breakout by Platform Type, Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 56

57 Atmail Server CommuniGate Pro Critical Path Memova Messaging Critical Path Mirapoint Message Server* Gecad Technologies AXIGEN IceWarp Unified Communications Server Ipswitch IMail Server Rockliffe MailSite Fusion Microsoft Exchange Server Openwave Mx Open-Xchange Hosted Edition Oracle Communications Unified Communications Suite VMware Zimbra Collaboration Suite PLATFORMS MARKET FORECAST, FEATURE COMPARISON OF COMMERCIAL PLATFORMS FOR SERVICE PROVIDERS Table 14, provides a feature overview of leading Commercial Platforms. Operating System Microsoft Windows X X X X X X Linux X X X X X X X X X Unix X X X X Mac OS X X X Others X X X X X X X Client Access POP3/IMAP4 X X X X X X X X X X X X X Outlook Connector X X X X X X X X X X X Apple Mac OS X X X X X X X X Webmail AJAX X X X X X X X X X X X X X Mobility ActiveSync X X X X X X X X X BES X X Other** X X X X X X X X X X Features Groupware X X X X X X X X X X X X X Instant Messaging X X X X X X X VoIP X X X X X X Archiving X X X X X X X X X X X X Anti-virus/Spam Filtering X X X X X X X X X X X X X Table 14: Commercial Platforms for Service Providers Feature Comparison, 2011 Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 57

58 x = included * Critical Path Mirapoint Message Server is an integrated appliance. Mirapoint Message Server runs on a proprietary operating system called Mirapoint Operating System (MOS), which utilizes a Red Hat kernel for its core. ** Other wireless synchronization technologies include Rockliffe AstraSync, Notify Technology NotifyLink, and technologies based on SyncML. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 58

59 PLATFORMS FOR BUSINESS SERVICE PROVIDERS MARKET SHARE Platforms for Business Service Providers are a growing sub-segment of the Platforms for Service Provider segment. Table 15, shows the of the installed base and revenue market share of platforms that are used by business subscribers in Microsoft is the leading business-oriented platform, and currently accounts for a quarter of the market with its Microsoft Hosted Exchange platform. However, the company charges relatively higher licensing fees compared to its competitors, and accounts for 93% of the revenue market share is this subsegment. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 59

60 Vendor Solution Installed Base (M) IB % Revenue ($M) Revenue % Atmail Atmail Server 1 0.6% $1 0.2% CommuniGate UC Centrex, Mobile Office % $4 0.7% Critical Path Memova Messaging, Mirapoint Message Server 5 3.2% $2 0.4% Gecad AXIGEN 1 0.6% $1 0.1% IceWarp IceWarp Unified Communications Server 4 2.6% $2 0.4% Ipswitch IMail Server 1 0.6% $1 0.2% Kerio Technologies Microsoft Kerio Connect 1 0.6% $1 0.1% Hosted Exchange (also Includes Office 365 and Live@EDU) % $ % Openwave Mx % $4 0.7% Open-Xchange Open-Xchange HE % $5 0.9% Oracle Oracle Communications Unified Communications Suite 8 5.2% $3 0.5% Rockliffe MailSite Fusion 1 0.6% $1 0.2% VMware Zimbra VMware Zimbra Collaboration Suite 8 5.2% $6 1.1% Others Others % $10 1.8% Total % $ % Table 15: Platforms for Business Service Providers IB & Revenue Market Share, 2011 Note 1: The installed base figures in the table above only include active mailboxes. We define active accounts, as accounts which have been accessed at least once in the last three months. Note 2: The installed base and revenues shown in Table 15 is a subset of the data in Table 9. Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 60

61 Figure 14, shows the installed base market share of Platforms used by business-oriented service providers, in Figure 14: Platforms for Business Service Providers IB Market Share, 2011 Figure 15, shows the revenue market share of Platforms for Business Service Providers, in Figure 15: Platforms for Business Service Providers Revenue Market Share, 2011 Copyright November 2011 The Radicati Group, Inc. Reproduction Prohibited 61