Exchange Buster Grabs $15M

PostPath, a three-year-old startup with a "drop in" alternative to Microsoft's Exchange Server, has gotten a fresh $15 million to continue its uphill battle. (See PostPath Raises $15M Series C.)

PostPath, which now has roughly $30 million in funding, is set on displacing Redmond in shops that are looking for an alternative to well-publicized drawbacks in Exchange -- while retaining their Outlook clients and other Microsoft apps.

Madness, you say? Can a 60-person company really expect to counter the rising tide of support for Exchange 2007, which is outfitted with a slew of improvements that address past complaints?

Absolutely, says PostPath CEO Duncan Greatwood -- especially since the new funding will enable the firm to add support personnel. "Really, the problems in Exchange's core architecture, having to do with the database and mail transport agent, are still there," he asserts. "Microsoft hasn't really touched those things."

Greatwood's (ex-Virata and Madge Networks) strategy is to add one or two PostPath servers to large networks that may have hundreds of Exchange servers, or put PostPath in place of other email servers in smaller firms.Greatwood claims PostPath's Server is up to five times faster than Exchange, thanks to its use of a Linux file system instead of Microsoft's database. Improved performance simplifies backup and recovery and allows for use of lower-cost storage, PostPath says. What's more, you don't have to fiddle with Outlook or any of the surrounding Microsoft applications, because PostPath has managed to duplicate the networking protocols Microsoft uses to link Exchange to other applications.

The ability to drop into a Microsoft network and work just like Exchange servers is PostPath's most significant claim, and at least one analyst thinks it's key to the company's future. "There are definitely other Linux-based email vendors with Ajax front ends and Outlook connectors... The ability to control the migration [from Exchange] is a unique message coming from PostPath," says Gartner VP Matt Cain.

Originally, Cain was skeptical about yet another Exchange alternative -- the market has several, including products from Mirapoint, IPswitch, and Scalix, to name just a few. But he says he spoke with some financial services firms who are "kicking around" the PostPath server and got positive feedback. Now PostPath's challenge is to grow its customer base, he says.

This is a tough challenge. The company has given away quite a bit of free software but claims fewer than 10 paying customers. But those customers reportedly include at least two big financial services firms.

One user is more than satisfied with PostPath so far. "We switched to PostPath from Groupwise. We tried to avoid Exchange... We put the system on live in December and the problems are just gone," says William Lawyer, information systems coordinator for the City of Marshalltown, Iowa.Lawyer's problems included an inability of Novell's Groupwise -- otherwise a "hands off" product, he says -- to cope with Web-enabled input from PDAs and other message sources in addition to Outlook. Back in December, he and his IT contractor, Brian Fistler of Marshalltown's Adaptive Computer Technology, originally tried to install an open-source server from Kolab to cope. Like PostPath, Kolab purports to work like an Exchange server with Outlook clients.

But the migration wasn't seamless. "We had many problems with group scheduling and calendars," Lawyer says. Sometimes collaborative scheduling worked for the city's power email users, who must interact with a range of outside agencies; sometimes it didn't.

Fistler had heard of PostPath and called the startup. Though PostPath has no office in Iowa, the vendor offered phone support and put Fistler and Lawyer in touch with several other companies who had used PostPath. (It's not clear whether these were paying customers or trial testers.) "Some had tried Exchange and had trouble restoring from backup to Exchange versus PostPath," Lawyer says. Their positive reports helped make the sale.

On the downside, Lawyer notes that PostPath doesn't work with all flavors of Linux -- just Red Hat, Suse, and CentOS. What's more, though he spent less than $7,000 on the whole project, some Exchange fans might claim that PostPath's price of about $67 per seat is greater than the $40 per seat at least one reseller claims for Exchange.

"I dont know why anyone would go with open source," says Barry Dowd, president of Integrated Business Intelligence Corp., an Ontario-based IT consultancy that is also a Microsoft Certified Gold Partner. "Exchange has been around for years and is proven technology with a large partner ecosystem and Microsoft to support your investment." In contrast, going with a Linux-based solution is great, he notes, as long as you have the expertise to maintain it. "You're always married to the one guy in the company who tweaked it."In Dowd's experience, customers haven't had any issues with Exchange performance, even though most of his customers are SMBs.

Greatwood is out to prove Dowd and others wrong. But it will be a tough fight. The roster of Microsoft's allies, particularly in the storage arena, is growing. (See EqualLogic Tests Exchange Support, FalconStor CDPs Exchange '07, and Mirapoint to Bundle SAN/Email Solution.)

Will PostPath look for its own storage alliances, particularly given its claim to help cut the cost of email storage? Yes, at some point, Greatwood says. "We are working with a number of storage vendors... We'll have more announcements on storage in the next couple of months."

Meanwhile, PostPath must convince at least a few significant customers to implement its wares in production environments and start talking about it. Given the volume of Microsoft Exchange deployments, even a sliver of replacement business could be worthwhile.

— Mary Jander, Site Editor, Byte and Switch