I really like SMBLive CEO Matt Howard's way of looking at software as a service. (Some argue that we should start calling it software enabled service.) Matt says running a business is all about maintaining "5 conversations": with oneself, co-workers, external partners (vendors/contractors/distributors), customers and the general public. So ideally, web apps should facilitate personal productivity, collaboration, vendor management, CRM and sales/marketing.

Traditionally, hosting providers have focused on helping customers maintain a web presence - which only fulfills 20% of the functionalities Matt describes. So I thought it was pretty awesome when Barbara Branaman mentioned that Concentric is in the process of integrating its new collaboration service with its clustered hosting and email solutions. I said the unified offering should help Concentric increase mindshare. Barbara said also importantly, it will boost wallet share. The goal is to earn a larger slice of more customers' IT budgets.

Barbara will need to keep a close eye on Google, whose Apps Premier cover about half of the 5 conversations. Remember last December's headlines about Microsoft battling Gmail for corporate workers' attention? It seems Redmond faces an even tougher challenge with respect to productivity apps: Ars Technica reported yesterday that Google Docs and Spreadsheet account for a 92% share of unique visitors, and 95% of the amount of time spent. I'm not impressed with Google Pages, but Blogger is pretty popular. I'm sure sooner or later both will be rolled into Google Apps, along with Google Base.

Meanwhile, have you heard about eBay's new partnerships with ERP/CRM provider NetSuite (spotted via Mark Crofton's blog) and popular social network Bebo? And SalesForce is looking to build a "circle of success" around its CRM app; David Berlind says their odds are decent.

Earlier David Snead asked via a comment on an earlier post whether easy interoperability between different vendors' apps will obviate the need for hosting providers to customize services for any audience. Based on Rodney Loges' experience, I think the answer is no.

Rodney (who was instrumental in digitalNATION's $100 million sale to Verio as well as Rackspace's launch of its Intensive service) has transformed his company from a web development firm into a SaaS provider by assembling a suite of best-of-breed content management, web analytics, collaboration, etc, tools for associations and non-profits. Each hand-picked application meets specific requirements that his customers share. I think that's what it takes to win in SaaS/SES - of which hosting is just a small percent. In other words, the key is customer segmentation.

BusinessWeek reports that 1&1 will soon start deploying Open-Xchange mailboxes in Germany, followed by rollouts in the US, Britain and France. The article reports that 1&1 manages 5 million email accounts on behalf of 2.7 million web hosting customers. (This is wildly inconsistent with the 6 million hosting customers and 65 million emails accounts in 1&1's Business 2.0 ad. Maybe these figures include users from 1&1 parent company United Internet's Web.de and GMX portals business?)

With Open-Xchange's open source solution, 1&1 will be able to offer Microsoft Exchange-like features for $5 per user per month, versus its $10-$15 $6.99 current price. BusinessWeek says this is "nothing but bad news" for Microsoft, but are Microsoft and Open-Xchange competing with each other? Or should both be worried that end users like Steve Rubel are turning Gmail into their personal nerve centers?

Steve is a senior VP at Edelman PR, an enormous organization that no doubt has an industrial strength email system, but Steve is hooked on Gmail because:

"Everyday I come across something on the web that I want to save for future reference... since I travel a lot, I need to access my bits from a mobile device. The latest version of the Google Toolbar has a send to Gmail function. Select some text or graphics, right click on it and send it to Gmail... Whammo - an instant personal database."

A friend who works at Microsoft says he can use his Windows Mobile phone to search his Exchange archive as well. But 10 GB Gmail accounts are available for $4.17 each per month (mobile client, website builder and web-based word processor and spreadsheet included). That's a 10x larger personal database compared with 1&1's 1GB allocation (Outlook 2003 and free domain name included).

Another important question is, to what extent will 1&1 be able to drive Open-Xchange adoption? Yes, as the world's largest hosting provider, 1&1 can deliver an enormous audience. But seeing is *not* deploying. As a point of reference, when I switched from (POP mail + Outlook + Blackberry) to (Google Apps + Gmail mobile) last week, I realized that despite the conveniently-located Google Start Page icon on my control panel, I still like Netvibes better. But thanks to the Gmail and Google Calendar widgets on Netvibes, I was able to piece together a best of all worlds solution.

If I were 1&1 CEO Andreas Gauger, I would think along the same lines and open up my community and technology platform. Customer A might prefer Gmail + 1&1's website builder, while Customer B might choose Open-Xchange mail + Google Pages. Why not use widgets, RSS and open APIs to help each user concoct his perfect combination?

CNet says today's the day. Google will be launching a subscription-based version of Google Apps for Domains. It will include Google Docs and Spreadsheets integration, 10 GB of Blackberry-accessible Gmail, 99.9% uptime, and 24/7 phone support for $50 per user per year. Google will also provide APIs for migrating data, enabling single sign-on, etc. (Update: the service is live; a free trial is available until April 30, 2007.)

Google will continue to offer free versions for consumers (no premium features) and educational institutions (with premium features, but less storage).

Let's say I work at a company with 10 employees. Google Apps (which include website builder and group start page/calendar in addition to Gmail/GTalk and document/spreadsheet sharing) would cost $500/year. What would the same budget buy at GoDaddy?

* $43.08: annual cost of cheapest hosting plan. While this includes 500 email accounts, each offers only 10 MB of storage, which means I'll probably need...
* $29.99: email hosting for 5+ mailboxes. Unfortunately, this would only give me 2 GB of *total* storage. On the bright side, GoDaddy does throw in...
* $0.00 (19.99 if purchased separately): group calendaring for up to 15 users
* $9.99: cost of 1GB online folder for file sharing.

If I'm not familiar with FTP and HTML, GoDaddy's WebSite Tonight site builder will set me back another $12. Which makes the bundle above ~$400 cheaper than Google Apps. On the other hand, it doesn't include IM, or web-based word processing and spreadsheet apps, or a shared start page that's customizable with 10,000+ widgets.

If I were Bob Parsons, I might have other worries besides competing with Google for customers. A couple of years ago, Bob told the New York Times that:

"Try to call Google and actually talk to somebody. It's not their forte. Now, they could acquire that, but at the moment it's a problem I don't have to deal with, so I'm not thinking about it. If they do, we'll go to work."

It seems the time has come for GoDaddy to get to work, particular since it's looking to hire 560 new employees this year. While Bob handed out $1.3M in bonuses in 2006, as well as "new vehicles, trips, electronics and cash prizes, with taxes paid", such incentives might pale in comparison with stock options from a certain company in Mountain View that might also be in the market for experienced call center staff...

PS - Read on Techcrunch that GE and Procter & Gamble are Google Apps customers. The New York Times and InformationWeek both call Google Apps an attack against Microsoft, but the folks in Redmond aren't the only ones who need to keep an eye on this. See this Techmeme thread for more related discussions.

That's what Business Week says. And Garett Rogers points out on his ZDNet blog that a Google Apps for Enterprises page is already online. Pixar is reportedly dying to ditch its homegrown messaging system for Google-powered seamlessness.

Google is expected to charge "a few dollars" per person per month. (Ars Technica says most likely less than $3, to stay competitive with Zoho.) Considering large scale deployments such as Arizona State University's 65,000 users, Google's 300-person enterprise group might soon be generating significant revenue.

In fact, Nick Carr thinks that Google has far greater ambitions than Google Apps as we know it. He's betting on additional SaaS acquisition following last year's JotSpot deal.

Everyone's asking how Microsoft's Office Live (now at 250,000 users) will hold up against Google's assault. Another good question is how the continued evolution of Google Apps will affect low-cost hosting providers? (GoDaddy and eNom are Google's domain registration providers at least. eNom also has Office Live's domain registration business.) And no, 24/7 support won't be enough for maintaining a competitive advantage; Google's planning to offer that as well.

PS - Just came across Phil Wainewright's very interesting list of mega traps for Google Apps. He wonders how committed Google is to generating subscription versus advertising revenue, and he worries that Google will ditch the paid apps business after setting loss-leading pricing expectations that no other vendor will be able to match.

My friend David is a happy GoDaddy customer. But a couple of days ago he complained that GoDaddy doesn't offer encrypted email. Isn't SSL encryption standard these days? How can anyone offer email services without giving customers the benefit of secure communication? David even created a pre-filled email link for his blog's reader to send GoDaddy the following message:

"Please provide SSL encrypted emails on smtpout.secureserver.net:80 and relay-hosting.secureserver.net:25. I'm surprised you don't offer this already. I have emails that contain important information that hackers can sniff on the network when I send and receive emails through your servers. Please integrate SSL support for your email services or I will be forced to switch hosting providers."

The question is, where would David go, if he were to leave GoDaddy? I see no mention of email encryption at 1&1. Or iPowerWeb (though David would be able to set up 2,500 mailboxes!). Or DreamHost. Or Verio. In fact, when I search for "SSL email", the only hosting company that comes up is WebNet77. It says on their site's footer that "The Lord is merciful and gracious, Slow to anger, and abounding in mercy" (PS 103:8). Customers, on the other hand, might not be quite as patient...

Has David identified an under-served market in our crowded hosting world? I would imagine he's not the only customer who cares about secure communication. For instance, I was somewhat impressed to read on Mozy's website that my data would be encrypted during transport to their backup servers.

I heard about the ZDNet article from David, and found several related stories on The Register.

On Monday and Tuesday, 1&1 said an unexpected surge in email volume caused delays in delivering messages to some of its UK customers. Incoming emails were queued and stored; no data was lost. By Tuesday afternoon, the company reported that everything was back to normal.

But two days later, The Register said it heard from a dozen irate customers who were unable to access 1&1's POP3 or SMTP servers. The company's webmail interface also gave a "HTTP 500 Internal Server Error". Customers complained that lack of information compounded their frustration.

This morning, The Register published a reader's speculation that 1&1 might have been DDoS-ed. His client's website rocketed from 50 pageviews per day to peaks of 600,000 both this week and on Jan 7 and 8. Possibly coincidentally, The Register had mentioned a Jan 9 DDoS attack against FastHosts, a 1&1 subsidiary. But 1&1 Press Chief Richard Stevenson explained that the outage was caused by "an important update to our mail server software and the subsequent restart of the mail servers". He expected some disruption to continue throughout the day due to "planned" maintenance - which the company somehow neglected to announce.

One ZDNet reader claims she was told by 1&1 that 80 million emails were still queued as of earlier today. 1&1 confirmed that "several million" messages had accumulated in the pipeline during the disruption, but denied that the queue ever reached 80 million. When ZDNet asked whether 1&1 will compensate customers for the down time, the company wouldn't say.

This incident reminded me of Gmail's lost messages disaster from a few weeks ago. Google's system completely deleted 60 users' emails, but most readers focused on giving each other backup tips rather than complaining about Google. Gmail is free, after all - even though Mary Meeker from Morgan Stanley reports that Google earns $9 per user per year in advertising revenue, and could double or triple this amount within 5 years.

At a time when even corporate users of enterprise mail systems like Microsoft Exchange are auto-forwarding their messages to free services such as Gmail and Yahoo! Mail, does POP3 email still represent a viable offering from ISPs and hosting providers? Its future consists of bigger mailboxes, lower monthly fees, and unsticky customers who expect perfect service. Is it any wonder that BSkyB decided to offer its broadband customers co-branded Gmail instead of running its own service?

Well, that's slightly ironic. I've just read on NineMSN, an Australian news site that's 50% owned by Microsoft, that corporate workers are ditching their Exchange mailboxes in favor of auto-forwarding work emails to Gmail. The article notes that this trend could eventually make Exchange Server expendable.

Microsoft is responding by urging IT managers to upgrade to Exchange Server 2007, and give employees 2GB or larger mailboxes. (Google offers 2.7 GB.) Exchange 2007 features a 5,000 user capacity and 35x faster mailbox indexing than Exchange 2003. Also importantly, the not-yet-released Windows Mobile 6.0 will allow users to search Outlook folders on the server via mobile phones.

It looks like Intermedia.NET already offers Exchange 2007. The company says it will upgrade current Exchange 2003 customers at no cost. Its standard plans come with 1GB mailboxes though.

There's no Exchange 2007 info on groupSPARK's website just yet. The company offers 70 GB to 280 GB storage space for packages with 100 to 500 included licenses, which makes the average mailbox quite a bit smaller than Microsoft's recommended size.

SWSoft's PEM package is also Exchange 2003-only for now. While Intermedia.NET and groupSPARK offer 100% outsourced solutions, PEM lets you set up 12+ server (5000+ licenses) Exchange deployments on your own hardware.

I have to say, though, I'm not excited about the idea of web hosting providers reselling Exchange licenses while having to compete with Office Live for domain registration and web hosting customers.

PS - Jeff Nolan from Teqlo is planning to use Gmail as his company's corporate mail service: "We looked at each other and I asked everyone else in the room if they could think of a good reason why we should not just use Gmail for our mail server, and start using the Google Calendar as well, eyes darted around and nobody raised any objections or issues..." Jeff points out that SocialText is doing the same thing.