VMWare has got it down: Sell a virtualization solution with anchor applications (and seats) that no service provider can live without, starting with email. This is the call we made when VMWare bought open source email and collaboration provider Zimbra from Yahoo! last February. And now they've delivered with the upgraded Zimbra Collaboration Suite Appliance 6.0 targeted at service providers and other virtual cloud hosters. What it means:
What it means #1. VMWare is solidly in the market to provision service providers with email. Service providers that want to resell Google or Microsoft's email have the benefit of low capital costs and rapid deployment. But service providers that don't want to resell another vendors' cloud services need a solution that runs at low cost on cheap servers with easy peasy provisioning. That's what the Zimbra collaboration appliance promises. Will it deliver? Love to hear from service providers on this one.
What it means #2. VMWare drives another nail into the coffin of on-premises business email. At $5/mailbox/month for cloud email, if you take away client software and mailbox administration costs, our analysis shows that it costs twice as much to host a mailbox yourself than to host it in the cloud. This offering gives service providers around the world the opportunity to compete at that price. So who would use on-premises email? Only someone with stringent requirements, massive scale, or a recent upgrade. Even the federal government is moving to cloud-based email as GSA has announced.
What it means #3. The race to the cloud email economic floor is on. Cloud economics come from four basic sources: labor automation, server utilization, purchasing scale, and self-service. So which approach — Google's, Microsoft's, IBM's, Cisco's, or VMWare's — delivers the best economics? I'd say it's TBD, but the fact that VMWare sells its solution through service providers means that it's not likely to optimize the costs (or the price of a mailbox) as well as the others. And that means service providers may have to treat email as a loss leader in order to compete with the email giants.
Love to hear your thoughts.