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Great piece of writing from Darryl! www.eweek.com/article2/0,1895,2100613,00.asp

Open-Xchange, 1&1 Partnership Is All About SAAS

By Darryl K. Taft, March 5, 2007

Open-Xchange's partnership with 1&1 Internet not only puts the collaboration software maker together with the world's largest Web-hosting company in 1&1, it also signals a huge opportunity for both companies to better tap the burgeoning software as a service market, the chairmen of both companies told eWEEK.

Open-Xchange, with U.S. offices in Tarrytown, N.Y., and research, development and operations in Olpe and Nuremburg, Germany, struck the deal with 1&1 Internet, in Montabaur, Germany, with U.S. headquarters in Chesterbrook, Pa.

Under the deal announced Feb. 27, Open-Xchange signed a partnership with 1&1 Internet to provide hosted e-mail and collaboration services based on Open-Xchange's Smart Collaboration technology.

Rafael Laguna, chairman of Open-Xchange, said this move is part of Open-Xchange's SAAS strategy to provide ISPs and Web-hosting companies with e-mail and collaboration functionality to serve the small and midsize business market space.

Likewise, Andreas Gauger, chairman of 1&1, said SAAS is ultimately the draw for his company as well.

"Web hosting is becoming more and more of a commodity play," Gauger said. "One way we are going is not just to help you promote your small or medium business but also help you manage it. The next steps are CRM [customer relationship management], etc. For us, this is the first step into software as a service. In three or four years, that will overtake the revenue we get from hosting."

Added Open-Xchange's Laguna: "The software as a service model adds a nice sales channel we didn't have before."

Indeed, "we expect to make more [revenue] with software as a service this year than selling software," Laguna said.

In addition, "with an application like Open-Xchange as a platform, we want to integrate things, not do it all ourselves," Laguna said.

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"With SAAS, this platform will be out there on millions of screens. We can do Web 2.0; we can bridge Web 2.0 with existing [legacy] applications. You can integrate stuff into your work environment, and this will expand more and more."

Under the terms of the partnership, 1&1 will offer a range of 1&1-branded e-mail and collaboration services on the Open-Xchange platform to customers worldwide, representatives from both companies said.

Available first in Germany and subsequently in the United States, the United Kingdom and France, 1&1 will offer the full set of Open-Xchange offerings including: PIM (personal information management) functionality, e-mail, calendaring, contacts and task management together with advanced groupware features such as Documail, Smart Linking and Smart Document Sharing, the representatives said.

The co-branded offerings will be available as stand-alone and as add-ons for existing hosting customers, company officials said.

Moreover, 1&1's use of open-source technologies such as Open-Xchange and the MySQL database provides high performance and reliability and offers 1&1 greater scalability than similar licensed solutions at a lower price, the company representatives said.

Also, Open-Xchange's open standards and open API enabled a complete integration into 1&1's back-end e-mail systems and business processes, such as user provisioning, systems management and billing processes, Laguna said.

"For small and medium-sized companies, hosted business solutions based on open-source technologies offer unparalleled value for money," said Marten Mickos, CEO of MySQL, in Uppsala, Sweden, in a statement.

"Open source is spreading throughout the enterprise—Open-Xchange and collaboration software are global drivers to establishing SAAS in this market."

Laguna said, "We are proving how well open-source software and SAAS go along."

Gauger said 1&1 will enable one million of its e-mail host customers to use the Open-Xchange client, and pricing starts at $4.99 for a single user per month—or even less with volume discounts. The new Open-Xchange Hosting Edition is available to hosters and features multitenant and multidomain support, Laguna said. In addition, "one of the important things for us is that the front end needs to be state of the art, so I'm talking AJAX [Asynchronous JavaScript and XML] and real fast Internet interactivity," Laguna said.

The OX Hosting Edition features a rich AJAX client, and all the company's functionality is delivered via an AJAX user interface. AJAX allows items on the screen to update automatically and data to be fetched in real time, avoiding the typical click-and-wait associated with most Internet applications.

Open-Xchange also introduced its Infostore, which gives users the ability to store any file in Open-Xchange in any file format.

"The difference between us and some others is we don't try to provide the user with every application they need. We let them use what they have and store it," Laguna said.

Users can browse with the AJAX interface. And the next step is to add some wiki functionality, he said.

Meanwhile, Open-Xchange is working on Open-Xchange Express Edition, for on-premises collaboration solutions. The product will ship in May, Laguna said.

In a meeting with eWeek in Berlin, Laguna said his goal is to get rid of e-mail. "If I have an open-source groupware that I can access on any format, I can get rid of e-mail," he said. "Nobody complains that they get too little e-mail."

Laguna said that although Zimbra, an Open-Xchange competitor, is viewed as the market leader in the open-source collaborative software space, the market is growing, and there is room for Open-Xchange to grow, as evidenced by the recent deal with 1&1.

Moreover, "I like Zimbra because they help define the space," Laguna said. "So thanks to companies like Zimbra and Scalix and others, the open-source groupware space is growing."

Open-Xchange is used by more than 1,200 organizations worldwide, with 1.6 million users, a company representative said. There are up to 10,000 downloads of the project code per month.

In addition, Open-Xchange has 650 partners worldwide, and its products are sold in 60 countries, company officials said.

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Open-Xchange started life in 1996 as Netline Internet Service, with collaboration technology developed for Compaq.

In 2002, the technology was licensed to SUSE Linux Open Exchange Server for SUSE Linux 8.0, which preceded SUSE Linux's acquisition by Novell.

Novell canceled the contract to avoid cannibalizing GroupWise, Open-Xchange officials said.

In 2004, the Open-Xchange open-source project was launched, and the company's flagship product, Open-Xchange Server 5, was released in April 2005.

1&1 was founded as a reseller of technology products, including an early online service, in 1992.

The company's mission was to provide an optimal Internet presence for private users and SMBs by offering a complete range of Web solutions at value prices. 1&1 has more than 2,400 employees, four data centers (including one in Kansas City, Kan.), more than 37,000 servers installed and 5.87 million customers on paid services, and 7.2 million domain names are registered and handled by 1&1.

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