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Open-Xchange Goes After Exchange

Open-Xchange Inc. made a move to become a much bigger deal in the Web hosting world recently by signing an agreement with the German-based 1&1 Internet Inc., the world's largest Web hosting company. The deal lets 1&1 provide hosted e-mail and collaboration services based on Open-Xchange's Smart Collaboration technology.

This move, which could potentially reach millions of users, is also intended to beef up Open-Xchange's Software as a Service (SaaS) strategy. The arrangement now gives thousands of ISPs worldwide the chance to offer both Microsoft-based hosting solutions alongside lower-cost open source solutions. Redmond Editor Ed Scannell spoke with Open-Xchange Chairman Rafael Laguna about the deal and what it means for his company, as well as for furthering the prospects of open source service providers in general.

Q: Why do you believe this is an important deal for not just Open-Xchange but the open source community in general?

Open-Xchange Chairman Rafael Laguna
Open-Xchange Chairman Rafael Laguna sees the 1&1 deal lifting the fortunes of open source collaboration software.

Laguna: We think it's significant because open source is taking a big step up the applications stack. We've all seen the success open source has had at the operating systems and middleware levels, but this is happening in the applications space -- specifically the collaboration space -- where there's a lot of opportunity right now for open source products. The parent company of 1&1 Internet, United Internet [AG], is the world's largest Internet hoster [4 billion euros]. They've decided that in addition to pushing Microsoft Exchange they needed something that's more price-aggressive and offers better functionality that lives side by side with Exchange. This deal allows them to push Open-Xchange more aggressively.

Q: What market opportunities does it open up for Open-Xchange to better operate side by side with Microsoft's Exchange?

Laguna: Open-Xchange is already integrated into Outlook, so Windows users can continue using Outlook along with the rest of the Microsoft Office suite. But now [users] can also take advantage of Office functions such as document management where [they] can store [their] files or link things to appointments. It can improve the way people deal with the information they work on every day. The lower-end market so far has nothing available to help them with things like this. Most collaboration software is too expensive.

Q: How does this deal advance your SaaS model?

Laguna: Software as a Service resonates well with open source. If you look at what open source has done for helping create the Internet, or helping companies like Google, Yahoo! and 1&1 come into existence, you realize the Internet and Web itself wouldn't exist without open source software. Companies like Google and Yahoo! couldn't create their services at the current price points without open source software. This is why open source is in the DNA of these companies. But what services companies need to do now is offer more services to customers. One way to do that is provide software functions that have not been available on the Web to date, and this is what you see Google and Microsoft doing. There's this huge space in the market that will be served by the hosters -- right now [they] control about 1 billion e-mail accounts worldwide.

Q: How does this deal enhance the collaboration capabilities of your products? There seems to be a market opportunity in Web 2.0-style collaboration, but only a few open source companies are pursuing it.

Laguna: I absolutely agree. Open-Xchange is a child of the Internet. Our software has always been designed to run inside a browser and so we have always been able to do Web 2.0 stuff. From a development standpoint that's very different than the old client-server model of Microsoft and Lotus. So in going to the next step with SaaS we not only have a few hundred people online, we have millions of people online. This creates a platform for applications we've yet to see. It'll be very hard for proprietary software companies to compete with this model.

Q: Do you see Open-Xchange getting into the applications business as a way to grow your services business?

Laguna: You'll not see from us a Web-based competitor for Office, or an AJAX-based word processor, because we feel people already have their favorite word processors. We just want to be the platform that makes them integrate their existing stuff, but also the company that delivers the core functions that make Web 2.0-type collaborations possible.

About the Author

Ed Scannell is the editor of Redmond magazine.

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