This announcement came out this morning - Google is buying Postini for $625 Million in cash! (Disclaimer: groupSPARK is a Postini partner.)

Postini is best known for its leading spam filtering services, but also offers the complete set of messaging security and compliance services. According to the press release, Postini serves over 10 million users from 35,000 businesses. Not bad for a company with about 300 employees, which means that on average, each employee generated about $2 Million of value.

Overall the SaaS messaging space is heating up - and is a key battlefront between Google and Microsoft. After all, email is the killer app for SMB's. So far, the messaging battle between the two titans has been in free email - Gmail vs. Hotmail. Google really shook the battlefield up when it introduced its gigabyte storage limit. And because the SMB market is where the real money is, this is where the war has now moved to for messaging.

This acquisition is the first volley from Google attacking Microsoft's hold on the lucrative messaging software for SMB's. Google ultimately wants to go after the Microsoft Exchange Server market, but hasn't much success so far getting SMB's to pay for services. Postini, on the other hand, has only paid offerings - which is a knowledge set that Google needs - from both a sales & marketing perspective to providing technical support.

Postini has a very similar set of offerings to Microsoft's EHS division, which was the result of Microsoft's acquisition of FrontBridge in August 2005. Google is playing catch-up here, but clearly will pose a strong challenge to Microsoft in the future.

I've never seen a more hyped-up product in the messaging world than the iPhone. At groupSPARK, we've been getting at least 2 calls or emails every day from our partners, who resell one of our SaaS offerings, Microsoft Exchange Server 2007 hosting, about iPhone compatibility. Their customers are SMB's who depend on email to run their business. And being the genuis at marketing that Steve Jobs is, it seems that everyone is talking about the iPhone, which will be available on Friday through AT&T. Also, both Walt Mossberg at the Wall Street Journal and David Pogue at the New York Times published reviews on the iPhone yesterday.

The big question we hear from potential iPhone buyers is: can the iPhone sync wirelessly with Microsoft Exchange Server? Well, based on the information that we've seen, the answer is a yes and a no. Microsoft offers its ActiveSync protocol for synchronization with mobile devices; ActiveSync allows for syncing of mail folders, Calendar, Contacts, and Tasks wirelessly. Obviously devices running the Windows Mobile operating system include ActiveSync; however, other mobile devices can license the ActiveSync protocol for a minimum of $100k, as Nokia and Motorola did.

It appears like the iPhone will not come with ActiveSync - at least not in the initial release. I suspect that Apple will include ActiveSync in a subsequent release - confirmed by ZDNet's Mary Jo Foley who believes that Apple has already licensed ActiveSync from Microsoft.. And I suspect that Apple is similarly looking to license BlackBerry Connect from RIM to suport wireless sync with BlackBerry Enterpriser Servers.

But, wait - Exchange users - there is still a way to make it work - partially! The iPhone does support IMAP Idle, also known as IMAP Push. However, IMAP only syncs the mail folders and not the Calendar, Contacts, or Tasks folders. So, you can at least sync your email from Exchange Server. However, your Exchange Server will have to have the IMAP port from the Internet, which is a security concern. Just make sure that you don't use regular IMAP because it transmits the username & password unencrypted; instead, you should use IMAP over SSL to ensure security.

Unless you've been camping out in Acadia National Park (one of my favorite places to rock climb) for the past couple of days, you've undoubtedly heard of the major BlackBerry outage - on radio, television, or online. Hell, you may have even had to seek professional help to cope with your unexpected CrackBerry withdrawal.

Tuesday night, around 8:15 pm EDT, BlackBerry's network went down for about 9 hours. During this outage, all BlackBerry users across all mobile carriers in North America were unable to send/receive email. Yes, this means that government officials (White House, Congress, Homeland Security, etc.), executives in companies of all sizes, system administrators, and everyone else who relies on e-mail enough to spend an extra $40-70 per month for a BlackBerry data plan was down. We're talking about an estimated 5 million people who suffered this outage.

Just think about the possible risks of this outage - what if a major real-world disaster had also occurred that night (i.e., 9/11 or Katrina) and the government officials would not have been able to communicate quickly? What if you use your CrackBerry to receive alerts from your infrastructure and thus didn't know that a server went down?

At groupSPARK - the leader in Private Label Exchange Hosting, we provide BlackBerry Enterprise Server service to thousands of companies. In fact, being able to do two-way wireless synchronization (cradle-free) between a user's Microsoft Outlook data and their BlackBerry handheld - all the time, automatically - is often the acute need that convinces small businesses to adopt Hosted Exchange. Our monitoring system alerted us of backlogged messages to their servers in Canada; within 15 minutes we ascertained what was happening and alerted our support team - before a single partner contacted us about this issue from their customer.

What really bothered me is how BlackBerry handled this outage. They didn't reach out to any of their customers to alert and communicate with them about the issue. They didn't (and still have not) post a single word on their website about the outage; IT administrators had to call the cellular provider or BlackBerry directly, which meant waiting on hold for 1-2 hours, to find out why their BlackBerry Enterprise Server wasn't synchronizing with their CEO's handheld. Worst of all, they still haven't explained what caused the outage and what they're doing to prevent it from happening again. It really seems like they didn't care much about their customers' pain.

This is not the first time that BlackBerry has had a major outage. I'm sure that IT teams around the world have since been meeting to figure out ways to mitigate this risk to their organizations. I think that some of them will think more about moving their BlackBerry users to a Windows Mobile-based device. Unlike the BlackBerry architecture where all data goes through their servers in their datacenter, the data for a Windows Mobile device travels directly (over the cellular network) from the handheld to the Microsoft Exchange Server that houses their mailbox. While a Windows Mobile device isn't quite as proficient for messaging as a BlackBerry yet, risk of downtime may be the deciding factor.

Btw, BlackBerry is having their annual conference, Wireless Enterprise Symposium, in three weeks. Too bad I won't be there to see the fireworks from their customers voicing their frustrations!

At my company, groupSPARK - the leader in Private Label Exchange Hosting, we watch all Microsoft Exchange Server-related developments very closely for obvious reasons. I have to admit that this new development caught me off guard. To understand the significance of this change, let's look at the history first.

Microsoft Exchange Server has the largest share in email server software today and Lotus Domino/Notes continues to lose market share to Exchange. Organizations pay a massive premium for the collaboration and accessibility features that POP3 email lacks. Because the market for groupware email software is lucrative, numerous companies have tried to take market share from Microsoft Exchange Server for many years by writing their own email server software and replicating the groupware functionality of Exchange Server - such as calendar sharing - and tying into Microsoft Outlook client. I still remember installing Samsung Contact years ago!

Since Microsoft started bundling Outlook into the Office suite, Outlook has slowly become the most ubiquitous email client used by organizations. In my opinion, Outlook was the key to Lotus Domino's decline as the Lotus Notes client was never as good. And it is because of Outlook's immense popularity that every entrant to the email server market has had to figure out how to integrate with Outlook - this is invariably the key to their success. Many of these companies tried doing this by writing an Outlook plug-in so that Outlook could communicate with their server using their own proprietary protocols, but the plug-ins were usually a pain to install and didn't integrate deeply. However, companies like Zimbra spent a lot of time and resources and ultimately succeeded in reverse-engineering the Microsoft protocol used between Exchange and Outlook to communicate. This protocol is called MAPI (Messaging Application Programming Interface) and Microsoft has kept it confidential so that Exchange competitors can't tie into Outlook.

BUT, it's a secret no more! Yes, Microsoft has now made available the entire MAPI protocol for licensing to anyone, including competitors. And they've renamed it from MAPI to Outlook-Exchange Transport Protocol. I suspect that Microsoft is finally doing this now in response to the ruling in the European Union which dictates that Microsoft must open up its communication protocols to the industry.

So, is the downfall for Microsoft Exchange Server beginning ? No, not really. Over the years, more and more features have been added to Exchange that make it much better: more robust, fault tolerant, deep integration with other Microsoft products, and productivity features such as Instant Messaging, Unified Messaging, increased collaboration. As the economy continues to focus more on the knowledge worker, the productivity features that Microsoft adds become more valued. But, this development does make Exchange Server vulnerable to competitors that will offer half the functionality for half the price - I believe that these alternatives will be successful at the low end and occupy a space between POP3 and Exchange. Within the next few years, there will more credible competition chipping away at Microsoft Exchange Server's dominance, which will force Microsoft to innovate faster. The messaging market just got a whole lot more interesting!

Happy New Year! A new year always brings new things - which is true even more so in the Internet services industry. I've been thinking about new things that will influence the web hosting industry this year. One thing that particularly struck me is hard drive size.

Hitachi Global Storage Technologies and Seagate Technology made product announcements about their upcoming 1 terabyte hard drives. Hitachi will start selling its new drive in the first quarter while Seagate promises to do the same within the first half of 2007.

Yes, that's right - one terabyte of space on a 3.5" hard drive with either a SATA or IDE interface. Hitachi plans on initially selling the drive for $399 - or $0.40/GB. The previous record was 750GB, introduced in spring of 2006. Building the home theater PC will now be even more powerful by being able to build a few terabytes of storage.

As for the effect on hosting companies, this will further drive customer demand for more storage for websites. And some hosting companies will undoubtedly raise the amount of disk space included with hosting plans as the year progresses. 1and1 offers 200GB of disk space for $9.99 already; what will they go to next once the one terabyte drives come down in price? Seriously, how many websites really need 200GB of disk space?

At groupSPARK Private Label Exchange Hosting, our partners, most of whom are ISP's and Web Hosting companies, are relaying their customers' demands for ever-increasing mailbox sizes to us. After all, who's got the time to delete email from Outlook? It's because of this trend that we now allow up to a 10GB Exchange Server mailbox size. As the year progresses, we will most likely also increase this limit.

Of course, offering larger and larger disk quotas as a service provider brings along its own headaches, namely backing up such large amounts of data and continually increasing the amount of disk space given to customers. Will it ever end? Probably not as long as hard drive manufacturers keep building larger drives!

We've all heard of Web 2.0. But, have you heard of Spam 2.0 - which affects all of us who provide e-mail services and was borne just two months ago? At groupSPARK Exchange Hosting, we've noticed that our inbound spam has pretty much doubled over the last two months.

According to Postini, they have seen spam rates increase by 73% in the last two months. And in this eWeek article, Barrcuda Networks is seeing a "67 percent increase in overall spam volume."

What's causing this sudden spike in spam? According to the article in eWeek, Russian hackers have created a massive peer-to-peer botnet by hijacking the PC's of tens of thousands of unsuspecting users to send out unprecedented amounts of SPAM. And this group of hackers has upped the ante in the spam battle by embedding images that evade spam "fingerprint" scanners by changing a few pixels every time and also by using backgrounds that make OCR technology useless.

Many of these spam emails promote penny stocks and according to this New York Times article, Spam Doubles, Finding New Ways to Deliver Itself, the stock prices do actually increase 5% - 6% after a flood of spam, enabling the spammer to make a quick buck. I know it's hard to believe that people buy Viagara and penny stocks from junk e-mail, but unfortunately it is true.

The profits incent spammers to continue their battle to outfox spam filters, which creates problems and opportunities for us providers who offer e-mail hosting. The problem is dealing with the headaches of higher levels of e-mail overall and investing in better spam detection technology. The opportunity is to upsell customers on "premium" spam filtering technology. I've heard from several hosting providers that their customers are demanding better spam filtering to fight spam 2.0, but in some cases are unwilling to pay additional fees for it. I think it's time that spam filtering ceased to be a commodity and back to being a premium service. After all, isn't spending $1-2 per user per month worth the time saved by the users? What do you think? Are the spammers winning?

Also, check out this spam statistics page provided by Postini.