Gartner released a report on Friday that suggested Google’s Gmail solution is ready to take on Microsoft in the enterprise email arena despite having just a tiny fraction of the market. “While Gmail’s enterprise email market share currently hovers around 1 percent, it has close to half of the market for enterprise cloud email,” Gartner research vice president Matthew Cain said. “While cloud email is still in its infancy, at 3 percent to 4 percent of the overall enterprise email market, we expect it to be a growth industry, reaching 20 percent of the market by year-end 2016, and 55 percent by year-end 2020,” Cain added, noting that Gmail should “now be considered a mainstream cloud email supplier.” Microsoft Exchange and Gmail are the only two services that have gained momentum during the past few years while other solutions, such as Novell GroupWise and IBM Lotus Notes/Domino have started to fade out. Cain said that companies should consider splitting their email services between the cloud and on-premises servers which, for now, “plays to Microsoft’s strengths.” Gartner also suggested the Google/Microsoft rivalry will make it tougher for other competitors to enter the industry. Gartner’s full press release follows after the break.

Gartner Says Google Gmail is Now a Viable Alternative to Microsoft in the Enterprise Email Market

Outlook for Cloud Email to Be Discussed at Gartner Symposium/ITxpo

STAMFORD, Conn., September 16, 2011— ﻿ After being in the market for five years, Google’s enterprise Gmail is building momentum with commercial organizations with more than 5,000 seats, and it now presents a viable alternative to Microsoft Exchange Online and other cloud email services, according to Gartner, Inc.

“The road to its enterprise enlightenment has been long and bumpy, but Gmail should now be considered a mainstream cloud email supplier,” said Matthew Cain, research vice president at Gartner. “While Gmail’s enterprise email market share currently hovers around 1 percent, it has close to half of the market for enterprise cloud email. While cloud email is still in its infancy, at 3 percent to 4 percent of the overall enterprise email market, we expect it to be a growth industry, reaching 20 percent of the market by year-end 2016, and 55 percent by year-end 2020.”

Mr. Cain said that, other than Microsoft Exchange, Google Gmail is the only email system that has prospered in the enterprise space over the past several years. Other enterprise email providers — Novell GroupWise and IBM Lotus Notes/Domino — have lost market momentum, Cisco closed its cloud email effort and VMware’s Zimbra is only now refocusing on the enterprise space.

Google’s journey to enterprise enlightenment, however, is not complete. Google focuses on capabilities that will have the broadest market uptake. Large organizations with complex email requirements, such as financial institutions, report that Google is resistant to feature requests that would be applicable to only a small segment of its customers. Banks, for example, may require surveillance capabilities that Google is unlikely to build into Gmail given the limited appeal.

While Google is good at taking direction and input on front-end features, it is more resistant to the back-end feature requests that are important to larger enterprises. Large system integrators and enterprises report that Google’s lack of transparency in areas such as continuity, security and compliance can thwart deeper relationships.

“Email is not a commodity, and cloud email is still maturing,” Mr. Cain said. “We believe that, for most organizations, performing one more on-premises upgrade, which will take an organization through 2014, is the most prudent approach. A less-risky approach to cloud email is via a hybrid deployment, where some mailboxes live in the cloud and some are located on premises. This hybrid model plays to Microsoft’s strengths given its vast dominance of the on-premises email market.”

“The intense competition between Microsoft and Google will make both vendors stronger and enable them to apply cloud expertise to other enterprise cloud endeavors,” Mr. Cain said. “The rivalry will make it difficult for other suppliers to compete directly in the cloud email and collaboration space.”

Additional information is available in the Gartner report “Google Gmail Emerges as a Significant Threat to Microsoft in the Enterprise” at http://www.gartner.com/resId=1770424.

Mr. Cain will provide additional analysis on the cloud email at the Gartner Symposium/ITxpo.