Cisco killed its hosted e-mail service just 13 months after launching it because it couldn't get enough customers to sign on despite the wide popularity of cloud application services.
Cisco Systems pulled the plug on Cisco Mail, the hosted
e-mail service it launched a mere 13 months ago.
While Cisco Mail was "well received," Cisco found that
customers were not interested in hosted e-mail as much as they cared about
"social software and video," Cisco said in a Feb. 22 blog
announcing the decision. Cisco declined to provide further
"We've since learned that customers have come to view e-mail
as a mature and commoditized tool versus a long-term differentiated element of
their collaboration strategy," wrote Debra Chrapaty on the blog.
Cisco originally launched Cisco Mail
in November 2009
because customers said they were interested in "divesting responsibility" for
managing e-mail in the same way they switched to using WebEx for Web
conferencing, according to Chrapaty. The service was rolled out via controlled
As more customers got used to the concept of cloud computing
and saw the benefits, there was demand for additional cloud services, according
Cisco's move demonstrated the challenge of penetrating a
mature market and the difficulty in delivery a complex and demanding
cloud-based application service, Matthew Cain, vice-president and lead E-mail
analyst at Gartner, wrote in a research note. Cisco invested $250 million in
the platform, according to Cain.
Cisco was completing against several established players in
collaboration, including Google Apps and Microsoft's Exchange Online, with far
more storage for a lower price. Cisco offered a
of $5 per month per user which including Outlook support,
Web 2.0 webmail client, e-mail, calendar, with only 5GB storage. In contrast, Google
Apps for businesses offered more functionality with 25 GB storage for $50 per
user per year. Microsoft offered cloud-based Exchange with 25GB of storage for
only $5 per user per month.
Back when Cisco launched Cisco Mail, Cain noted in a
research note that there was "rapid price erosion" in the field, as all the
vendors were slashing prices. Cisco needed to build out a "price-competitive
suite of collaboration services" that included e-mail, instant messaging, Web
conferencing and shared workspace, Cain wrote at the time. Launching Cisco Mail
was critical to protecting Cisco's voice-over-IP and WebEx business, he said.
Cisco remains "very committed" to collaboration technology,
Chrapaty wrote. The collaboration technology market is valued at about $38
billion, according to Cisco.
However, without e-mail at its core, Cisco will struggle to
win customers over to its collaboration services, Cain wrote. Enterprises would
rather select a single supplier for their unified communications and
collaboration services, he said. To succeed, Cisco needs to "demonstrate value"
beyond what Microsoft already delivers, according to Cain.
"It takes away the ability for customers to use Cisco as a
single stack collaboration vendor," said Cain.
Cain also noted that "the incumbent e-mail supplier,"
such as Microsoft, is generally in the best position to provide additional
collaboration services since enterprises would just bundle in the new products
on top of the same infrastructure.
Cisco will assist customers with their transition to other
e-mail platforms, whether they find a new hosted provider or go back to an
on-premise solution. Cisco will "continue to integrate" other platforms to
protect legacy systems and customers will continue to receive support for the
remainder of their contracts, Chrapaty said.
The Cisco Mail team will be reassigned to other
collaboration products and services that are "more strategic," Chrapaty said.
Cisco's biggest challenge would be to convince customers its
other cloud initiatives will be around for the long haul, such as the
collaboration platform Cisco Quad, its Web-casting and video-sharing
application Show and Share as well as its collaboration tool Cisco Pulse, Cain
"If Cisco is pulling the plug in such an extensive effort,
what reassurances to potential customers have that the same fate does not await
other products?" asked Cain.