Gmail threatens Microsoft in enterprises, says Gartner

Google's email market share, at 1%, will rise to 10% in a few years, says analyst firm

Google's share of the enterprise email market currently "hovers" at around 1%, but it will reach 10% within a few years, research firm Gartner predicts.

Google is gaining ground with enterprises that have 5,000 or more seats, Gartner said, naming several public- and private-sector users with more than 10,000 Gmail seats.

Big organizations that use Gmail include Motorola Mobility, with 22,000 users; the U.S. General Services Administration, with 17,000; the Los Angeles city government, with 17,000; automaker Jaguar Land Rover, with 15,000; the InterContinental hotel chain, with 25,000; and the Wyoming state government, with 10,000.

"We are at the start of a major escalation in the war of the email clouds," wrote Gartner analyst Matthew Cain, in a report on Google's enterprise progress that was released Friday.

Cloud-based email systems account for about 4% of the overall enterprise email market, according to the research firm.

Microsoft released a cloud-based Exchange service in 2010, and a more expansive cloud offering, Office 365, this year.

Google, meanwhile, has been making improvements to its platform "at a blistering pace," said Cain in his report, counting more than two dozen "substantial changes" to the platform in the past 12 months.

Those upgrades included improvements in security and manageability, Gartner said. For example, new security features include the ability to reset a user's sign-on cookies. And enhancements to the system's manageability include the ability to manage policy by user groups.

Microsoft's answer to Google's upgrade pace "is that it intends to add functionality to Exchange in the cloud before adding it to the on-premises version," Cain wrote. "This represents a major shift for Microsoft, and its actual execution has yet to be demonstrated."

But Cain, in an interview, said a major reason why enterprises may reject Google is because their needs are too complex for a cloud-based offering. Their requirements in areas such as internal routing, application integration and compliance may be too much for cloud-based services to handle, he said.

"Someone with sophisticated and integrated systems isn't going to be looking to the cloud anytime soon," Cain said. "The cloud vendors can't be in the position of doing all this customization."

In a response to Gartner's forecast, a Microsoft spokesman said that "despite the availability of other productivity solutions in the market, Office 2010 has become the fastest-selling version of Office in history and we're seeing tremendous interest from businesses of all sizes in Office 365, our cloud productivity offering."

"Microsoft Office offers an enterprise-proven, unsurpassed productivity experience that is delivered on our customers' terms -- whether on premises or in the cloud. No other vendor can match that," the spokesman said.

Cain, in his report, cited a number of things Google has to do to win more enterprise businesses. Among other things, he said the company must deliver new features on schedule. Another obstacle for Google is a lack of transparency, which is a problem affecting the cloud in general, he said.

"Google remains especially opaque, refusing to share details about the proprietary code that underlies access control and privileged access mechanisms, and it shares only minimal details about the degree and form of offline backups that are used to recover from outages," Cain wrote.

Google recently announced that 4 million businesses use its Google Apps software and another 5,000 adopt it every day. The company didn't provide a breakdown on those businesses by size.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov, or subscribe to Patrick's RSS feed . His email address is

Copyright © 2011 IDG Communications, Inc.

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