Lies, Damm Lies and Market Share
For most businesses, TCO (total cost of ownership) analysis will come down to two contendersıMicrosoft Exchange and Lotus Notes. At least that's what most industry experts think.

An InformationWeek April telephone survey of 200 businesses found that 41 percent of those businesses that have or are consolidating on messaging are doing so with Microsoft's Exchange. Novell's GroupWise and Lotus Notes/Domino tied at 13 percentıfigures that reflect the preference of many smaller businesses for Exchange and GroupWise, rather than actual users on a system.

Eric Arnum, editor of the EMMS newsletter, estimated installed base as of March of this year at 22 million for Notes, 13 million for Exchange and 8.8 million for Novell's GroupWiseıindicating growth of 2 million seats for Notes, 3 million for Exchange and 300,000 for GroupWise from year's end 1997 estimates.

Other respected estimates put Novell in second place based on user surveys that reflect bundling and other practices that influence the actual use of Exchange. But many analysts think it's largely irrelevant whether GroupWise is No. 1 or 2 because its numbers include older architectures and it draws its customers from an already besieged NetWare base.

Similar controversies surround market share in general. Tom Austin, a Gartner Group Fellow and vice president, suggests that as of year-end 1997, the actual number of enterprise messaging clients in use for Notes was more like 12 million; Exchange stood at 4.2 million; and Netscape at 1.1 million. Figures weren't available for GroupWise. In some cases, the reduced numbers reflect bundling, or product acquisition without deployment or even turning off the product.

"Microsoft is coming on strong, Novell is no longer losing market share, but clearly the market is consolidating around IBM and Microsoft," says Austin. "Our projection is that Lotus keeps its lead in this space for three years or longer." At that time, many analysts predict that messaging will be equally divided among Notes, Exchange and a catch-all category including Internet mail and GroupWise.

There remain, however, a cadre of both businesses and analysts who predict that standards-based server mail systemsılike SunMail and Netscapeıwill eventually overcome the competition. While most messaging systems, today, support major industry standards, the simplicity and reliability of using native protocols, versus gateway approaches, can prove advantageous. Once these Internet messaging systems incorporate greater features and functions (including better directory services and management) there are those who believe they will have a significant total cost of ownership advantage in the market. Analysts like Nina Burns of Creative Networks and Sara Radicati, CEO and president of the Radicati Group, think a changeover to pure open systems from standards-wrapped proprietary products, like Exchange and Notes, could be just two to three years away.

Austin has his doubts, however, in part because Gartner has serious problems finding sufficient enterprise Netscape users in the random sampling it conducted for its TCO study. He also suggests that businesses may only need the stripped-down capabilities of Internet mail today, but they're more likely to buy a full-featured package because of its import for the future.

Similar issues effect GroupWise, which Austin says is weak in the areas of collaboration and as an applications platform. Gartner found, in fact, that 79 percent of those using GroupWise did so for simple office automation.

In the meantime, many of the almost 21 million users of legacy MS Mail (6.7 million) and cc:Mail (14 million) will face a period of important decision-making. And as much as IBM would like to fold cc:Mail users under its Lotus wing, and Microsoft would like to migrate MS Mail users to Exchange, those paths aren't a given. Austin estimates that about 85 percent of MS Mail shops will move to Exchange, while no more than 75 percent of cc:Mail shops will upgrade to Notes. He thinks at least 15 percent of cc:Mail users will defect to Exchange and about 10 percent of MS Mail user to Notes/Domino. Radicati predicts that a full 40 percent of those on legacy systems will move away from their current legacy provider to embrace mail systems from another vendor.

Austin believes much of the displacement has less to do with TCO than with migration strategies. He believes IBM erred in promising cc:Mail users convergence with Notes and then abruptly shifting to a migration strategy in Januaryıyears after Microsoft began preparing its MS Mail users for the retirement of that product and the upcoming migration. "[IBM is] losing users because [it] took so long and didn't invest as heavily in a painless migration," says Austin.