Major Web hosting provider launches low-cost Exchange rival

Giant Web hosting provider 1&1 Internet is now offering U.S. customers a push e-mail and collaboration service, based on the open source groupware made by Open-Xchange, that could rival Microsoft Exchange.

Pricing for 1&1 MailXchange, the brand name 1&1 is using for the service, starts at $4.99 per user per month, with steep volume discounts available. It includes e-mail, calendaring, contact, and document sharing and management, among other features, and comes with 5GB of e-mail storage and 2GB of document storage for each user.

In contrast, the company currently charges $6.99 per month for Microsoft Exchange.

Meanwhile, Open-Xchange, which recently announced a partnership with Network Solutions, is hoping to broaden its footprint by signing additional hosting deals and forming “a SaaS ecosystem” involving various independent software vendors around the product, said CTO Juergen Geck.

Daniel Golding, vice president and research director at Tier1 Research, said it’s unclear how much of an impact such products can make, even at such a low price point: “There are some Microsoft products that are shaky, where there’s a lot of room for a wedge. The problem with Exchange is that it’s really good. So where do you compete? It’s on price.”

Still, 1&1 Internet has a large installed base using POP3 (Post Office Protocol 3) e-mail and will be able to pitch the new offering to that audience, he said.

“The strategy here is indeed upselling our customer base,” said Oliver Mauss, CEO of 1&1 Internet.

The company has no plans to dump its hosted Exchange business, however: “It is an established brand. We’re going to have both in our portfolio,” he said.

Microsoft’s plans to sell hosted Exchange and other business software offerings is causing some angst among its partner community. It will charge $15 per user per month for a hosted suite that includes Exchange Online, Office SharePoint Online, Office Communications Online, and Office Live Meeting.