Despite the best efforts by billion dollar competitors to gain share in the enterprise messaging-collaboration market the past few years, none have been able to loosen Microsoft's iron grip.
IT shops remain open to considering the offerings of traditional competitors such as IBM Lotus with its Notes/Domino combination, as well as those from newer competitors such as Google Apps, Oracle's Beehive and Cisco's WebEx. But the majority of enterprises are reluctant to swap out large chunks of Microsoft-based messaging infrastructure just because competitive offerings can't replace some critical functions.
"If you go to most large shops and offer to take away their Exchange or Notes and replace it with Gmail and Google Apps, they aren't going to be too happy," said Eugene Lee, a senior systems administrator for a large bank in Charlotte, N.C. “There are a lot of advanced features people now take for granted in products like Exchange. Google and others have yet to invest in a lot of that.”
One analyst agrees that Microsoft messaging competitors, particularly Google, have a long road to travel before they become legitimate competitors to Microsoft in the enterprise messaging market. In fact, Google's value to some IT shops is as a bargaining chip in negotiating better licensing deals with Microsoft.
"Those who have done their homework know the bloom is off the (Google Apps) rose, said Peter O'Kelly, Principal Analyst with O'Kelly Associates. They might use Google as a way to introduce pricing competition, like when you renegotiate a Microsoft or IBM license and you go in wearing your best Linux tee shirt with the penguins all over it."
Google innovates, Microsoft follows
But not everyone dismisses Google as a legitimate competitor to Microsoft so readily. While he is in the midst of migrating some 100,000 users from IBM Lotus Notes to Microsoft's Business Productivity Online Standard (BPOS) suite, Mike Blake, CIO with Hyatt Hotels Corp. in Chicago said he has a confession to make.
“My dirty little secret is I’ve got about 364 users on Google Apps and it’s working fine," Blake said. He added that Hyatt conducted a thorough evaluation of BPOS and Google Apps, and that BPOS won in a "51 to 49 type of vote."
"Microsoft has to look over its shoulder with Google. SharePoint plus Outlook and [Office] 2010 is still technically and functionally superior, but I’m not sure how much longer that gap will continue. Google introduces new innovation and Microsoft is not there yet," Blake said. "Google seems to know how to sell into business."
There are a lot of advanced features people now take for granted in products like Exchange. Google and others have yet to invest in a lot of that.
Eugene Lee, a senior systems administrator for a large bank in Charlotte, N.C.
For years Microsoft and IBM Lotus, with Exchange Server and Notes/Domino respectively, were the only two pit bulls in the messaging-collaboration ring savagely competing for dominance. Over the last several years, Exchange has emerged as the clear winner. Analysts attribute Microsoft's win to a combination of aggressive pricing of its corporate licensing plans, the strength of its reseller network, and its overarching strategy stretching from its on-premises to cloud-based applications.
Not to be overlooked, some add, is the fact Microsoft reacted more quickly and effectively to the market's preference for Internet-based messaging-collaboration solutions than did Lotus.
"When the market shifted to Internet-centric computing, most organizations looked to decouple or more loosely couple their messaging, communications and collaboration,” O'Kelly said. “A big part of the IBM Lotus Notes/Domino proposition was having all that stuff seamlessly integrated. Well the market changed and IBM didn't move with it.”
While a general consensus among analysts interviewed for this story said they believe Exchange has captured approximately 65% of user seats with IBM Lotus holding anywhere from 10% to 20%, some point out that Notes still has real pockets of strength in certain geographies as well as a number of vertical markets including banking.
The power of Lotus Notes
"I can't say the Notes franchise is not material -- it is,” said Ted Shadler, vice president and principal analyst with Forrester Research, Inc. “The more important question is, is it growing and where is it growing. It is certainly growing more overseas than it is anywhere else. It's still a two-horse race but Exchange has the lion's share, no doubt."
However, one weakness in Microsoft's messaging-collaboration strategy is the lack of support for multiple mobile computing platforms. Presently it only supports Windows on its mobile devices.
"We have our Forrester Mobile Collaboration Wave coming and Microsoft is not in it because they aren't running more than one mobile OS,” Shadler said. “Mobility is a huge gap in their solution set today.”
Another reason Notes has staying power -- one that is not necessarily a positive -- is the difficulty longtime users have migrating large amounts of historical data and internally developed applications to another platform.
"Migrating the messaging aspects of things is not too difficult, but migrating the large number of Notes apps we have and all the content in these (Notes) databases is a heck of a lot harder," Lee said.
While industry observers see companies like Lotus, Google, Oracle and Cisco either playing catch-up or resigned to being niche players, they also see Microsoft quietly building strength in its core messaging-collaboration products. Many think the company has done a good job with the online versions of Exchange, SharePoint and Lync, as well as with its upcoming Office 365, which bundles all three together.
Exchange, Office 365 and Azure
These offerings, working in tandem with Azure, the company's cloud computing platform, should give Microsoft a consistent enterprise messaging-collaboration products story that stretches from on-premises to the cloud.
"Microsoft has done a good job heading off concerns that might drive people off things like Exchange and Active Directory by giving them enough options with products for staying on-premises, going online, or letting someone else host your applications,” said Dana Gardner, Principal Analyst with Interarbor Solutions, Inc. in Gilford, NH.
Users would have to have a lot of discomfort to switch. While Microsoft is rapidly becoming a "utility" in the messaging-collaboration space, as it is with desktop operating systems and applications, Gardner warns the company will have to be a lot more creative in delivering online services to corporate users if it hopes to maintain market share and revenue growth.
"Microsoft is a monopoly with a lock on several markets, yet (investors) don't value the company any more than they did 10 years ago,” Gardner said. “This means they need to generate higher margins from new products and services that leverage their 'utility' products. The utilities will be of decreasing economic value to them going forward.”
Ed Scannell is Executive Editor of TechTarget's Data Center and Virtualization Group. He can be contacted at firstname.lastname@example.org. Senior News Editor Barbara Darrow also contributed to this story.