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Cisco: Changing Market Dynamics in the SaaS E-mail Market

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For an analyst's view of Cisco's announcements, see these four postings by Mike Gotta (he's currently at Cisco's Collaboration Summit):

• Understanding Cisco's Collaboration Strategy (Part 1): What Is Driving Cisco into the Collaboration Market?
• Understanding Cisco's Collaboration Strategy (Part 2): What Is Cisco Announcing?
• Understanding Cisco's Collaboration Strategy (Part 3): Clarifications and Questions
• Understanding Cisco's Collaboration Strategy (Part 4): Is Cisco's Vision Holistic Enough?

Mike notes, "In those areas [virtual computing, voice and video networks, and inter-business collaboration] Cisco will progress and mature over the next 3 years (expect incremental consistency)--people should not expect overnight success--this remains a journey for Cisco."

I agree--Cisco still has a lot to learn in these markets, and it will not be an overnight success. However, these announcements have already changed the dynamics of the market. Looking at just hosted e-mail:

• Microsoft just lost its "California trendy vs. business-like" positioning: When going up against Google Apps, Microsoft has been able to say, "Yes, Google's trendy, but wouldn't you rather deal with a company that's been selling to enterprises for years?" In some cases, large enterprises, put off by Gmail's downtime and Google's enterprise cluelessness, have said yes, purchasing BPOS or Exchange Online. Cisco now disrupts that binary choice. Cisco can call high; it's been selling to enterprises for years. So while Cisco is new to hosted e-mail, it's only about a year behind Microsoft, and it's also a "safe" choice. For enterprises that just want to outsource e-mail--they don't care how it integrates with a collaboration platform--Cisco has now became an option. 
• IBM now has another enterprise SaaS e-mail vendor to go against: IBM's Lotus Live offering is for SMBs; if a large enterprise wants someone else to run its Lotus Notes e-mail system, IBM Global Services offers hosting services. If a large customer came to IBM looking for e-mail hosting, they were also probably looking at Google Apps and Exchange Online Dedicated. Now Cisco gets added to the mix.

The big question at the moment is how much Cisco WebEx Mail will cost. The Cisco WebEx Mail product page extols the virtues of the product, but doesn't mention pricing. Assuming it's in the ballpark of $50 per user per year, enterprises now have a new option to consider.

Unofficially, News on Cisco's Hosted E-mail Solution is Out

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On Friday, November 6, The Wall Street Journal posted a story noting that Cisco would soon be announcing a new e-mail solution as well as video sharing and social networking products. Although Cisco doesn't make the official announcement about its SaaS e-mail solution until two hours from now (12 ET today), the Friday trickle has already turned into a Monday flood:

• Marguerite Reardon, "Cisco ruffles feathers with new collaboration tools," CNET News, November 8, 2009.
• Clint Boulton, "Cisco Adds Social Software, Hosted E-mail to Collaboration Lineup," November 9, 2009.
• "Cisco Breaks Down Barriers to Business to Business Collaboration," CNNMoney.com, November 9, 2009.

The question was never "if" Cisco would offer SaaS-based e-mail, but rather "when." Cisco bought PostPath in August 2008, and was clearly working to bring a "Cisco-ized" version to market. In fact, if you attended the SaaS e-mail vendor panel I ran at this year's Burton Group Catalyst Conference, you will remember the Cisco representative saying a SaaS-based e-mail solution was in beta test--and told the audience if anyone was interested in being in the beta to contact him afterwards.

Information missing from the pre-announcement news stories is pricing for the service. It had better be in the ballpark of $50 per user per year. This is the number that Google has burned into people's brains, and one that Microsoft met last week with it's 50% price cut of Exchange Online. (In this case, the WSJ article is wrong. It stated, "Microsoft recently dropped the price of its hosted email service from $15 per person per month to $10." That's the price for BPOS. Exchange Online was $120 per year; it's now $60 per year, and with volume discounts it gets below $50 [e.g., 10,000 users is $49.32 per user].)