Big Hosting Deal Gives Open-Xchange A Lift Vs. Microsoft


1&1 Internet, the Germany-based hosted e-mail and collaboration giant, has added Open-Xchange to its hosted solutions roster. Though not hugely known in this country, 1&1 Internet is a European powerhouse with market capitalization of $4 billion euros.

Most interestingly, 1&1 Internet offers hosted Microsoft Exchange Server as well as a less pricey, home-built e-mail. Open-Xchange will move in and sit atop that open-source infrastructure but offer customers more than just vanilla mail, said Paul Sterne, CFO and general manager of the Americas for Open-Xchange, working out of the company's U.S. headquarters in Tarrytown, N.Y. Open-Xchange's world headquarters is in Olpe, Germany.

Users of the current 1&1 Internet mail service will get a certain number of Open-Xchange seats free with their current contract. If they convert additional seats, there will be an incremental charge of $4.99 per seat in quantity-one amounts. Volume discounts bring that per-seat price down in big deals.

"The notion is to make people familiar with the benefits of our software and provide an incentive for them to migrate," Sterne said.

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Open-Xchange provides not just mail but also collaboration, task management, PIM, calendaring and other capabilities. Stern said ISPs and other hosting providers are looking for a competitive advantage as Google forges ahead with its free mail and other mail vendors also come down into their wheelhouse.

The conventional wisdom, Sterne told CRN, is that "you have to find a vertical to get into the mainstream."

"The open-source community has been struggling," he said. "A year ago, we realized the vertical with the most understanding of the open-source stack, the power users, tend to be Web hosting companies. They've been using Apache and the whole LAMP stack for years. Apache server still has something like 80 percent market share. Then we started to talk to those folks who are seeing challenges from Google and Microsoft."

Sterne estimates that 1&1 Internet has about 40,000 hosted Exchange users vs. a whopping 6 million users of its other mail product. His company expects the deal to result in the setup of more than a million Open-Xchange business mail and collaboration accounts.

The 1&1 Internet implementation, Sterne added, is not exactly the current commercial Open-Xchange 5 product but a precursor of versions to come. The 1&1 Internet iteration is Ajax-based with a new look and feel, and it doesn't include key elements in the commercial Open-Xchange 5, he said. For example, there's no administration module because it's administered by 1&1 Internet.

Open-Xchange is in discussions with other hosting partners on similar deals.

1&1 Internet can offer Open-Xchange in Europe now, and it plans to roll it out in the United States in April. The target customers are small companies.

Open-Xchange and 1&1 Internet have worked together in stealth mode for months, according to Sterne. He said the hosting deal represented a quarter of Open-Xchange's revenue last year, and he expects it to be worth "multiple millions" this year.