E-Mail Server Market Growing

According to research done by Frost & Sullivan, email had surpassed the telephone as the most frequently used tool for corporate communications by 1998.

Frost & Sullivan found the total number of emailboxes installed worldwide reached approximately 112.4 million in 1998, up from 48.7 million in 1997. This number comes in lower than the 263 million emailboxes in the world estimated by The Yankee Group.

Revenues generated by the email server market reached $1.90 billion in 1998, up 145.5 percent from 1997, according to Frost & Sullivan. The corporate email server market is slightly larger than the ISP market, with 68.4 million users in 1998. The corporate market dwarfs the ISP market in terms of revenue, accounting for 91.8 percent of revenues in 1998.

The top drivers of the corporate market, according to Frost & Sullivan, include the increasing importance put on email in business, the replacement of old systems, and the demand for functionality. The leading restraints for the corporate market include the Y2K problem occupying resources, high prices, and the scalability limits of enterprise systems.

The ISP market grew more rapidly than the corporate market in 1998. Frost & Sullivan estimates there were 44 million ISP emailboxes in the world in 1998, up from 12 million in 1997. Revenues generated from the ISP market reached $156.1 million in 1998, a 196.1 percent increase over 1997.

Despite the high growth seen in 1998, Frost & Sullivan sees the ISP market rapidly reaching saturation and competition from low-priced alternatives. The top drivers in the ISP market, according to Frost & Sullivan, include the growing number of Internet users, the advent of commercial systems targeted at ISPs, and the growth in e-commerce. Restraints in the ISP market include the use of free software, the relatively small number of major ISPs, and limited Internet access in developing countries. Open-source products comprise over 70 percent of ISP email servers in use today, Frost & Sullivan found.

“Due to harsh competition in the corporate market, by 1998 several vendors had switched their focus to the ISP market segment,” said Frost & Sullivan research analyst John McCormick. “Competition in this market is also affected by the prevalence of open source products such as Sendmail.”

Frost & Sullivan predicts the email server market will decline slightly in 1999 due to Year 2000 issues, but will surge from 2000-2004. The US market should reach saturation in 2005, causing a decline in worldwide revenue, Frost & Sullivan found.

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