February 23, 2011, 1:31 PM — Cisco Systems has decided to kill its cloud-based e-mail service Cisco Mail, only 13 months after it was introduced, the company said in a blog post on Tuesday.
With the growing acceptance of cloud services, Cisco saw a chance to offer e-mail services along with its successful WebEx Conferencing service, which combines desktop sharing through a web browser with phone and video conferencing. But it seems customers weren't as interested in getting e-mail from the networking giant.
Cisco's failure, after investing $250 million, demonstrates the challenge of penetrating a mature market, and the difficulty in delivering a complex and demanding cloud-based application service, Matthew Cain , vice president and lead e-mail analyst at Gartner, wrote in a research note.
Cisco said it folded the service because customers have come to "view their e-mail as a mature and commoditized tool", which has apparently made the field less interesting for Cisco.
Before committing to any cloud e-mail platform, companies ought to validate its success and momentum, Cain wrote.
Cisco Mail competed with Google Apps, an online package of e-mail, scheduling and productivity applications. The companies are very much polar opposites. While Cisco aims to find new areas where it can charge a premium for its products and services, Google aims to make products and services a commodity, in order to boost advertising sales.
When the search giant launched Google Apps in 2007, it immediately went to an extremely low price, Cain said in an e-mail.
On paper, you can see that Cisco was fighting a losing battle. Google Apps offers a wider set of services with more storage for less money.
Cisco Mail's standard package, which included Outlook integration and 5GB of storage, cost $5 per user per month, while Google Apps for Business offered five times the e-mail storage for $50 per year.
Organizations are increasingly buying suites of collaboration tools, according to Cain.
For companies that want to move their e-mail and more to the web, there are other suites, including Microsoft's own Exchange Online, which offers 25 GB of storage for $5 per user per month. Today, Exchange Online is part of Microsoft's Business Productivity Online Standard Suite, which also includes SharePoint Online, Office Live Meeting and Office Communications Online. It will also be part of Microsoft's Office 365 online productivity package when it launches later year.
Cisco said it will assist existing Cisco Mail customers with their transition to other e-mail alternatives. The company will also offer customers support for the length of their contract, it said.
