MCI WorldCom and Critical Path Power into Outsourced Messaging

  • Written By: P. Hayes
  • Published: May 1 2000

MCI WorldCom and Critical Path Power into Outsourced Messaging
P. Hayes - May 1st, 2000

Event Summary

ATLANTA, April 3 /PRNewswire/ -- MCI WorldCom today announced the availability of MCI WorldCom Managed Email, a complete suite of turnkey solutions to provide mid- and large-size businesses and organizations fully managed e-mail systems ranging from Internet e-mail to hosted Microsoft Exchange. Together with Critical Path Inc., a leading global provider of business-to-business Internet messaging and collaboration solutions, MCI WorldCom will provide global businesses with managed e-mail services, including hosted mailboxes and integration of internally managed mail servers. (Source: MCI WorldCom)

Market Impact

MCI WorldCom has now jumped head first into the ASP messaging market, partnering with Critical Path for hosting services. Initially MCI WorldCom and Critical Path will be offering the following services: Web mail service, starting at $2 per user, per month, POP3 mail service starting at $3.50/user/month, IMAP4 service starting at $5.50/user/month and a Microsoft Exchange collaborative service starting at $12 per user, per month with 20MB of disk space.

Outsourced, or managed e-mail is the next logical progression within the messaging industry. This is primarily due to the increasing costs of internal support and associated technical headaches. As most now know, the Information Technology department, for the majority of organizations has turned into a revolving door, making employee retention close to impossible. Messaging professionals are not inexpensive; claiming salaries into the 100s of thousands of dollars. Couple this with the usual upfront headhunter's fee of 15-20% and Internal support for many organizations becomes out of reach.

The ASP market is in its infancy and will take approximately 2-3 years to mature and have a noticeable impact on the internal operations of corporate Information Systems (IS). The corporate collaborative messaging market consists of greater than 175 Million client seats, with the lion's share held by Lotus Notes Domino and Microsoft Exchange, each of whom have installed bases greater than 50 Million seats each. We believe that within a 3 year time frame, the outsourced corporate messaging market will capture 25% of the existing install base, which sizes the ASP Messaging market at 47.5 Million Seats (Probability 70%).

MCI WorldCom's service will allow mid-large size businesses the option of either outsourcing a component of their e-mail system such as a company's remote user base, or to outsource the entire messaging system. Internal system administrators can maintain control over their outsourced systems, allowing user administration in whole, or in part of their e-mail management. Critical Path's secure hosting environment, coupled with the speeds and feeds of MCI WorldCom's frame relay network, not to mention reputation, should propel MCI WorldCom to the forefront of Messaging Application Service Providers (MASP).

The majority of Messaging ASPs are generally start-ups, some well funded, some not, leading to uncertain financial viability which can (and will) negatively impact the anticipated service levels. One of MCI WorldCom's greatest strengths, besides their virtually unmatched infrastructure, is solid corporate strategy and proven financial viability. Furthermore, MCI has priced their offering very competitively, which will attract more corporate buyers.

Vendor Winners/Losers

Existing Messaging ASPs such as United Messaging, Allegro (A Company), Interliant and numerous other smaller vendors will have their sales impacted by MCI WorldCom. While MCI will not capture all of the Microsoft Exchange outsourced market, we do believe they will emerge into a leading, stable position. Allegro has a better chance of competing with MCI due to the financial viability and stability of their parent company, We also expect AT&T to step into the Messaging Application Service Provider market with the next two quarters (probability 70%), providing strong competition for MCI WorldCom and furthering the negative impact on smaller or start-up ASPs.

Vendor Recommendations

The announcement from MCI WorldCom and Critical Path was certainly not a surprise. In fact, it seems to be an entirely logical extension of MCI WorldCom's Telco venture. MCI WorldCom and Critical Path are entering the ASP market during its infancy and we expect them to emerge as market leaders. The selection to team up with Critical Path adds yet another feather to MCI WorldCom's offering. Critical Path is one of the Internet's leaders in mission critical messaging, bringing stability, reliability and security to the table. Combine that with WorldCom's wide area network infrastructure and the result is a solid and proven messaging service.

MCI WorldCom already has clients signed up and deployed for its newly announced Exchange outsourcing service. To continue the upward growth trend for its ASP offering, MCI WorldCom must turn to its marketing and sales force and establish itself as a "household" name within the messaging ASP market.

User Recommendations

Organizations looking to outsource all or a piece of its messaging functionality should evaluate a messaging ASP vendor based on the following criteria:

  1. Product Functionality: Make certain you will have the same, if not added functionality once you outsource your messaging. Also ensure that you will have administrative control over any components that require internal manipulation, such as ad-hoc user creation.

  2. Product Technology: Analyze your messaging vendors infrastructure and disaster recovery scenarios to maximize reliability and stability.

  3. Product Cost: The ASP market is in its infancy, and therefore prices are negotiable depending on the number of users outsourced and length of contract. Make sure you get quotes from at least 3 messaging ASP vendors to give you sufficient leverage.

  4. Financial Viability: The majority of ASPs are Internet startups entering the perceived "gold-rush". Verify through basic financial research that your selected vendor will still be in business three-five years from now and have the funds necessary to host your messaging solution with top of the line hardware and technical talent.

  5. Service and Support: Verify that the outsourced help desk has been sufficiently trained and is technically competent to handle any issues that may arise. Also determine the average response time to a typical problem ticket. If you can't get the support you need, you are looking at the wrong vendor.

MCI WorldCom and Critical Path score well in all of the above areas, offering all aspects of Exchange functionality with a virtually unmatched infrastructure. In addition, their product cost offerings are par for the market and are priced competitively. Their financial viability is highly desirable given their standings within the Telco market. Critical Path, renowned through the messaging industry for their technical expertise, will handle support. Given that MCI WorldCom and Critical Path have good marks in all five areas we strongly believe that if you are looking to outsource your messaging, MCI WorldCom should be on your short list.

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