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Five years after entering the market, Google’s enterprise Gmail is
building momentum with commercial organizations with more than 5,000
seats, and it now presents a viable alternative to Microsoft Exchange
Online and other cloud email services, according to Gartner. However,
the report noted Google’s journey to enterprise enlightenment is not

"The road to its enterprise enlightenment has been long and bumpy,
but Gmail should now be considered a mainstream cloud email supplier,"
said Matthew Cain, research vice president at Gartner. "While Gmail’s
enterprise email market share currently hovers around 1 percent, it has
close to half of the market for enterprise cloud email. While cloud
email is still in its infancy, at 3 percent to 4 percent of the overall
enterprise email market, we expect it to be a growth industry, reaching
20 percent of the market by year-end 2016, and 55 percent by year-end

Cain said that, other than Microsoft Exchange, Gmail is the only
email system that has prospered in the enterprise space over the past
several years. Other enterprise email providers — Novell GroupWise and
IBM Lotus Notes/Domino — have lost market momentum, Cisco closed its
cloud email effort and VMware’s Zimbra is only now refocusing on the
enterprise space.

In the Gartner report, "Google Gmail Emerges as a Significant Threat
to Microsoft in the Enterprise,"  the company’s analysts noted
Google focuses on capabilities that will have the broadest market
uptake. Large organizations with complex email requirements, such as
financial institutions, report that Google is resistant to feature
requests that would be applicable to only a small segment of its
customers. Banks, for example, may require surveillance capabilities
that Google is unlikely to build into Gmail given the limited appeal.

"Email is not a commodity, and cloud email is still maturing," Cain
said. "We believe that, for most organizations, performing one more
on-premises upgrades, which will take an organization through 2014, is
the most prudent approach. A less-risky approach to cloud email is via
a hybrid deployment, where some mailboxes live in the cloud and some
are located on premises. This hybrid model plays to Microsoft’s
strengths given its vast dominance of the on-premises email market."

The report also noted while Google is good at taking direction and
input on front-end features, it is more resistant to the back-end
feature requests that are important to larger enterprises. Large system
integrators and enterprises report that Google’s lack of transparency
in areas such as continuity, security and compliance can thwart deeper
relationships. "The intense competition between Microsoft and Google
will make both vendors stronger and enable them to apply cloud
expertise to other enterprise cloud endeavors," Cain said. "The rivalry
will make it difficult for other suppliers to compete directly in the
cloud email and collaboration space."