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Will Businesses Exchange Microsoft Exchange for Gmail?

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Right now, Microsoft (Nasdaq: MSFT  ) Exchange owns the enterprise email market. But according to a report by Gartner, Google's (Nasdaq: GOOG  ) popular Gmail service has a good shot at making a dent.

Gmail has long been popular among consumers, but breaking into business class would be huge victory for the search giant. Like most all of Google's big pushes, Gmail's strength lies in the cloud. The report cites that while Gmail's overall enterprise email market share is around a measly 1%, it has almost half of the market for cloud-based enterprise email, which is still in its early days.

Currently, cloud enterprise email accounts for only between 3% and 4% of the overall enterprise email market, but Gartner projects significant growth in that segment, potentially rising to 20% by the end of 2016 and 55% by the end of 2020.

One shall stand, one shall fall
Others have tried to crack the enterprise market with little success. Novell, which was acquired by Attachmate, offers Groupwise, while IBM's (NYSE: IBM  ) Lotus Notes has been losing traction and Cisco (Nasdaq: CSCO  ) shut down its cloud email attempts. Can Big G stand up to the challenge?

In recent years, Gmail has been the only cloud offering that has thrived beyond Microsoft Exchange and continues to gain momentum in the enterprise space. One challenge the company faces is being able to provide features that are unique to the enterprise market, such as surveillance capabilities used by financial institutions. Some larger organizations think Google is hesitant to focus on features that appeal to only a limited segment and instead gives its attention to front-end capabilities that cater to larger audiences.

You got the touch
Google is probably the only provider that has what it takes to present a potential threat to Mr. Softy's grip on the business email market. Google needs to address some of the back-end functionality requests from companies if it hopes to win them over. I've been a user of both Exchange and Gmail for years, and Gmail takes the cake in my mind. Business users with unique requirements are a far harder sell than are consumers with low switching costs on e-mail, but Google's offering includes some very compelling features beyond the attractive aesthetics -- Gmail is far more than meets the eye.

What do you think? Can Gmail take on Exchange? What '80s movie am I referencing? Share your thoughts in the comments box below.

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Fool contributor Evan Niu holds no position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Google, IBM, Cisco, and Microsoft and has created a bull call spread position on Cisco. Motley Fool newsletter services have recommended buying shares of Microsoft, Google, and Cisco and creating a bull call spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 18, 2011, at 7:15 PM, don1941t wrote:

    The Transformers - 1986. Verifiable archival of email is missing from gmail. Until companies have an alternative to our litigious-minded world, they will be required to maintain control of their servers. If G can eliminate lawsuits they have a chance take over Exchange.

  • Report this Comment On September 18, 2011, at 8:06 PM, dastaub22 wrote:

    MSFT Exchange customers use Gmail as an option to squeeze some negotiating leverage away from MSFT when they re sign their exchange software with MSFT.

  • Report this Comment On September 18, 2011, at 9:18 PM, Oholland wrote:

    While gmail has a shot at taking on exchange and even taking a slice; it will be a tall order and several years down the road. The enterprise can't depend on the cloud unless there's quality Internet connection and exchange work just fine if or when the internet connection is unavailable.

    Exchange 2010 can be called cloud messaging because any smart device connects directly to exchange 2010 via activesync.

    Additionally, Outlook 2007 and 2010 does not require the need to now pop or smpt configuration; rather, the user only need to know the name (url) user name and password.

    Gmail is great and they are constantly improving but to say gmail will over power exchange anytime soon, is a far stretch.

  • Report this Comment On September 18, 2011, at 9:51 PM, torpex77 wrote:

    No. No they won't.

    I looked at switching my company over.

    There are 3 main reasons why we won't switch.

    1) We can't change the main URL we use to access gmail from mail.google.com to mail.mycompany.com. mail.google.com is blocked at many of our customer sites. If we can't get to our email, then it's not very useful.

    2) Global address book functionality is is pretty much non-existent. For example, we couldn't have a single "sales contacts" address book shared by all of our sales guys. Their "shared contacts" functionality only really means that things are shared within your domain.

    3) Contact sync to mobile devices. At least to the iPhone, there's no way to only sync a subset of your contacts. I really don't want or need everybody in my contact book copied over to my phone.

    I'd also add that their support, at least through their forums, seems to be very casual. And I paid for my domain.

    Oh, and new features roll out on the free side first and often don't work at all for the paying customers google+ for example.

    Maybe google will get there, but right now I don't think they care all that much about corporate. Solutions and support in that area seem pretty half-baked.

    Doug

  • Report this Comment On September 19, 2011, at 12:02 AM, baldheadeddork wrote:

    Doug's right. Analysts and bloggers talk a lot about Google challenging Microsoft on Office and Exchange. ("It's free! Microsoft is in trouble!!!") But Google is not even close to offering what businesses would need - and they don't seem to be seriously interested in trying.

    You can't overstate the importance of the administration and support issues Doug mentioned. A Microsoft ecosystem is more expensive, but it has the flexibility to create the structure you want and both locally certified admin/engineers and in-person support from Microsoft. If you compare that against forcing your business into a cookie-cutter administrative template and not having support, most businesses that I deal with consider G-Mail more expensive.

    The trend I'm seeing is actually running towards Microsoft and against Gmail in very small businesses. Until recently Exchange was prohibitively expensive for companies with fewer than ten employees. Now there are hosted exchange services that offer all the benefits of Exchange/Outlook for $13 month per user. It's not for everyone, but I've got a couple of clients who are really happy with it because Gmail didn't offer the options they wanted.

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