Big names struggle for ISP email

Successful corporate email software vendors, like Microsoft, Netscape Communications, and Lotus Development, are having trouble duplicating that success in the ISP messaging and collaboration markets, according to a new report.

The report, released this week by International Data Corporation, found that Internet service providers and telecommunications companies that offer email services to their subscribers are "overwhelmingly" choosing basic messaging software, such as SendMail or their own homemade or proprietary systems, over more advanced software.

"The vendors have great expectations. There is an assumption that if they built it, [customers] will buy it," said Mark Levitt, an analyst at International Data Corporation.

But, according to the report, ISPs aren't opening their wallets just yet.

The study found that although the 155 ISPs and telcos in the United States and Europe surveyed identified Netscape as the company currently holding the highest mind and market share, it still faces a tough challenge in selling to ISPs and telcos. Only 1 of 155 respondents reported that it is considering adding a Netscape system to host subscriber mailboxes within the next 12 months.

Levitt attributes ISPs and telcos' lack of interest to a poor marketing campaign being waged by email software vendors. And he concludes until vendors understand the email requirements of ISPs and telcos those campaigns won't become any more compelling.

"It's not a product issue. The issue is vendors are opening shop and no one is coming through the door," Levitt said.

The study found that the catch-22 is that ISPs are reluctant to invest in commercial software to improve current services or host new services until they see customer demand for specific services. Meanwhile, end users are unlikely to ask for services until they see which ones are available and the resulting benefits.

Netscape is looking to the ISP and commercial Web services market as a way to continue its growth, as other markets either slow down or don't pan out.

After losing much of its lead in the browser market and failing to make much headway in the groupware market targeting midsized businesses, Netscape is now devoting much of its resources to courting large companies that are demanding more robust Web server and email software. Those types of applications are most often found on the servers of Net access providers.

As previously reported, Microsoft also has released a new version of its software for ISPs and phone carriers offering Internet access, email, and Web hosting.

Microsoft Commercial Internet System also carries Microsoft's first "annuity pricing," collecting a monthly fee of 50 cents per subscriber, based on how many individuals use a Microsoft intranet or extranet application.