GFI sells a variety of tools, one of which is MailArchiver for Exchange.

Summary of Capabilities

• Customer-installed archiving for MS Exchange.
• Available since December 2004.

Illustrative Pricing

• $324 for 25 seats; $1,296 for 200 seats; $4,320 for 500 seats; $3,780 for 1,000 seats.
• After first year, maintenance is 20% of purchase price.
• For details, go here.

Main Types of Prospective Customer

• U.S. and U.K.: Customers mainly driven by compliance and legal discovery.
• Rest of world: Storage management is the driver; mailbox size reduction and better performance.
• U.S. is getting a lot of interest from schools.
• Typical customer has 200 to 250 seats.
• H250 customers with over 1,000 seats; about 30 of them have 5,000+ seats.
• Also many small customers with 50 or so seats.

Competition

• At high end: Symantec Enterprise Vault.
• At SME end: Highly fragmented; perhaps the main one is Barracuda Message Archiver.

Competitive Strengths as Perceived by Company

• Reasonable functionality for extremely competitive price.
• Much easier to install and maintain than Symantec.
• Strong multilanguage support.

Finances

• Ferris Research estimates current revenues at about $10M annually for GFI’s archiving products.
• GFI as a whole did $60M in calendar 2007.

Challenges

• Hosted archiving: Very easy to install and cheap to operate.
• Product’s focus is on email; it will need to add support for other types of information, whether in motion or at rest.

Miscellaneous Comments

• V6, out in September 2008, will have Outlook support via a plug-in. Hitherto, archive access has been via a Web browser.

… David Ferris

Hitherto, mobile email for businesspeople has been provided via technologies such as those from RIM and Windows Mobile. Consumer email has been handled by other technologies. Longer term, the separation will probably erode:

• Users will want a very powerful handheld for their own purposes. Their personal needs will generally require hardware that’s a superset of what’s needed for their business applications.
• Bandwidth required for business applications will be less than or comparable to that needed for personal applications.
• Generally, handsets will belong to the user, rather than to the organization that employs the user.
• Handsets will be perceived as mainly devices used in peoples’ lives, rather than as things used primarily for work.
• Users will buy the handsets they want and the carriers they want; their organizations may pay a portion of the hardware and network fees.

Email and instant messaging are very important business applications on handhelds, and — especially email — have driven RIM’s success.

Now consider what’s happening at Oz, which specializes in email and instant messaging technology for mobile phones. It sells its software to handset carriers and mobile operators that embed the technology and sell it to end users. In short, it’s ultimately a consumer pitch.

Oz has just launched Oz SmartMail, designed for smartphones. This is moving closer to the needs of business:

• Dynamically synchronizing email with the device.
• Background transfers of emails.
• Foldering.
• Offline mail access.
• Attachments (ability to view/access depends on third-party support on the mobile device).

Oz is holding off pitching business for the moment, and probably wisely so. But it’s not hard to see a gradual convergence of business and consumer email and IM capabilities.

… David Ferris

For a while now, Microsoft and its larger consulting partners — such as HP — have been telling customers that direct-attached storage makes a lot more sense than shared disk arrays for their Exchange mailbox stores. This has been greeted with a certain amount of incredulity in some quarters. However, Microsoft has now put its money where its mouth is, so to speak.

Microsoft IT has always been a key player in the Exchange team’s “dogfood” strategy (as in, “We eat our own dogfood”). So it was natural that it should follow the advice to ditch its expensive storage-area networks (SANs) and move to less expensive direct-attached storage.

The key was to make full use of Exchange 2007’s continuous cluster replication (CCR) feature. CCR allows Microsoft IT to build clusters of mailbox servers that ship database logs in near-real time, so that there’s always an up-to-date logical replica of the database available, should there be a hardware failure.

This does mean that Microsoft is essentially duplicating all of its mailbox hardware — i.e, 50% of its servers are sitting almost idle, just maintaining a database replica and being a source of “nearline” backups. However, the economics are still attractive — duplicating servers turns out to be less expensive than buying SANs.

For more on this topic, Microsoft IT offers this white paper, talking about its experience — albeit in rather sanitized tones.

… Richi Jennings

Unison is a new unified communications offering:

• Provides email, directory, IM, voice, voicemail, calendar, contacts, virus control (ClamAV), spam control (SpamAssassin), and backup.
• Voice/voicemail is a complete PBX offering running on the server.
• Server end runs on customer-installed standard PC hardware.
• User interface is a rich Windows client--in the future a plugin for Outlook will be available.
• Technology is very standards-oriented; e.g.,uses XMPP for IM.
• Main target is organizations with 20 to 1,000 employees, for which a single server suffices.
• Main competition is Microsoft Exchange/OCS, etc.
• Main strengths vs. Microsoft:
  • Ease of installation.
  • MSRP: $50/user/year, or $36K for a perpetual server license.
  • Ease of use that comes from having everything in one place.

Microsoft is clearly validating the UC space, and educating the market. Unison’s aggressive pricing and the ease of installation could be attractive to many small organizations. One wonders how prepared users will be to move away from Outlook to Unison’s own client — it’s tempting to think they’d prefer an Outlook plugin.

… David Ferris

For a while now, Microsoft and its larger consulting partners — such as HP — have been telling customers that direct-attached storage (DAS) makes a lot more sense than shared disk arrays for their Exchange mailbox stores. This has been greeted with a certain amount of incredulity in some quarters. Let’s scratch the surface …

As with most email-centric server applications, Exchange has always had difficulty scaling, due to disk performance bottlenecks. As the number of active users grows, so does the number of simultaneous read and write requests to the disk storage. Even the best disks need several milliseconds to service an average request — that’s simple physics — so the classic solution to high user loads was to spread the load over more and more disks, using techniques such as striping. This is what disk arrays are good at — fast, multiuser access, while keeping the data safe from inevitable hardware failures.

DAS, on the other hand, is much less expensive, but not as scalable. The classic assumption was that DAS was fine for small, brand office servers, but anything more taxing needed an external array.

With Exchange 2007, however, much more of the disk usage can be serviced by a large in-memory cache. In previous versions, the maximum amount of physical memory that a server could have was less than 4GB — this limit has been raised substantially in Exchange 2007. According to tests run by HP, moving from 4GB to 22GB of memory can reduce physical disk accesses by 70% — although you should note that this is a best-case figure.

The combination of this additional caching and the improved performance of disk interface technologies such as serial-attached SCSI (SAS) has substantially changed the economics of storage.

… Richi Jennings

Leading commercial wiki vendor Socialtext has just added spreadsheet support. This is a very interesting development and substantially enhances the value of a wiki. For example:

• Spreadsheets are used as a convenient tool for many nonfinancial applications, such as simple databases and presentation graphics.
• Multiple people can work on the same spreadsheet. Among other things, that substantially reduces the number of bugs.
• Users can get notifications of changes through the standard wiki notifications.
• Different spreadsheets can be linked.

The capability was developed with Dan Bricklin, co-developer of VisiCalc, the first PC spreadsheet.

This is the only full-function-spreadsheet-in-a-wiki of which we are aware. We hope such capabilities become the norm.

… David Ferris

Archiving products for email have been around for a while now, and customers often need to consolidate archiving systems, or move from one archiving platform to another. This is due to:

• Mergers or reorganizations
• The need for more modern technology

These migrations are usually painful, time-consuming, and costly. The easiest way is to export all the data to PST, and then import it back into the new system.

Now you can buy an off-the-shelf product that can help you migrate your archived data to a new system. TransVault is a new product being offered by Essential Computing. It supports Symantec Enterprise Vault, Autonomy/Zantaz EAS, Open Text eCONserver for Exchange and PST files, and presumably more will follow.

… Bob Spurzem

Many of you will be familiar with the work of Ivan Pavlov, in which he determined that certain reflex responses — like a dog salivating before his normal mealtime — occur conditionally based on one’s previous experiences. We believe there is something to his research that can be applied to email.

Consider these questions:

• Have you ever sat in a location where you knew you didn’t have Internet connectivity, and found yourself clicking send/receive in Outlook just to try and get at your new email?
• Do you sometimes find yourself checking for new email multiple times in a minute?
• Is your BlackBerry the last thing you look at at night, and the first thing you pick up in the morning?

We have come to the conclusion that there is something deeply imprinted on our human nature that has designed us with a need to communicate. Communication can take many forms: in person, via phone, via cell phone, via instant messaging, via Facebook, or via email, to mention a few. For many of us in the corporate world, sitting in front of Microsoft Outlook (or your favorite email client) fills that need to communicate, to feel included, or to feel relevant. We tell our colleagues to “loop me in” or to “copy me,” and otherwise ask to be included on communication that we may care about, or may not.

Set against that backdrop, think of the many days where your inbox has become a frenzy of emails, reply-alls, questions, comments, and flames. Your adrenaline is flowing, and you can barely keep up.

Then consider the times when your inbox traffic has died down. You sit there, half-expecting the deluge to start any moment, feeling guilty about the many other things you could be doing. For whatever reason, though, you can’t keep Outlook closed for any length of time.

Crazy, we know. But we believe that — much as Pavlov’s dogs salivate for that next dish of food — many of us are almost addicted to that next new message that arrives in our inbox.

Have you checked your inbox lately?

… David Sengupta

The number of desktop email clients in widespread use appears to be decreasing (although there are many clients available). The increasing use of Webmail interfaces (Gmail, Yahoo, Hotmail/Live, etc.) is arguably an influence on this.

We believe a key reason is that the major platforms all have a first-rate “default” interface, and there is little reason for most people to choose anything else.

• Mac OS has the excellent — if prosaically named — Mail.
• Linux has the open source Thunderbird interface, which is now being developed by Mozilla Messaging — a for-profit subsidiary of the nonprofit Mozilla Foundation; its sister company, the Mozilla Corporation, develops the Firefox browser. Thunderbird has a credible core development organization, as well as a wide open source community and a range of associated tools and plugins.
• Windows has Outlook, which most Windows business users use, but is purchased as an extra. Consumers now have Windows Live Mail, which replaces the older Outlook Express. Thunderbird is a good alternative for business users who do not want to pay for Outlook.

It is likely that this small set of user interfaces will increasingly squeeze out alternatives, as we saw, for example, with Eudora.

… Steve Kille, with Richi Jennings

On July 31, 2008, McAfee announced it will buy Reconnex. The deal closed on August 14, 2008.

• Current security offering consists of: virus and malware control, spam control, phishing and spyware control, surf control/URL filtering, and malicious web site protection
• Along with Symantec and Trend, McAfee is one of the top tier anti-virus vendors. This business has been stable for several years
• Does over $1B/year, mostly in virus control
• Over the last five years, has extended its offering beyond anti-virus, with limited success. It’s been making renewed efforts over the last 12 months to grow the non-anti-virus side of its revenues. This acquisition is clearly part of these efforts

Seller Reconnex Background

• Sells data leak prevention software, that scans inbound and outbound traffic
• Founded in 2003
• Vontu was main competitor. In 11/07, Symantec acquired Vontu for $370M. Vontu was three or four times larger than Reconnex; Ferris Research estimates Vontu’s revenue run rate at $30M when it was acquired

Buyer McAfee Benefits

• McAfee’s current offering has limited data leak prevention, via user-defined policies. The acquisition substantially builds McAfee’s DLP capabilities. And thus help it build a broader security offering
• Gets technology and engineering staff

Seller Reconnex Benefits

• Gets access to McAfee much larger marketing capabilities
• Gets cash needed to continue operations

Seller Reconnex: Valuation Considerations

• Reconnex revenues: cal 2005-$1.5M, cal 2006-$2M, cal 2007-$2.5-$3M, cal 2008-$4M proj
• Revenue run rate at time of sale: $1M/quarter
• Unprofitable
• Total capital raised to date by Reconnex: $46M to $50M

December 2004. $5.8M, bringing total to $11.3M. Existing investors Norwest Venture Partners and Outlook Ventures co-led the round

April 2005. $3.5M, led by Levensohn Venture Partners, bringing total to $14.8M

May 2006. $16M, from August Capital and existing investors Norwest Venture Partners, Levensohn Venture Partners, and Outlook Ventures. Bringing total to $37M (discrepancy between $37M and $14.8M + 16M unclear--editor)

Funding since then has been bridge financing from investors

• Very small customer base: perhaps 10-15 real customers
• 70 employees
• McAfee originally offered $55M; Reconnex declined seeking higher bid, issued enthusiastic momentum press release on July 15 2008 to push up price; poor results following however drove price down to $46M

Terms of Deal

• $46M in cash
• Price/revenue ratio: 11:1
• All Reconnex common shares and options worthless; VCs get their money back

Comparable Deals

Possible Negatives/Concerns About the Merger

• McAfee is building a common administration and user experience across its security products. That’s hard to do, and the firm may well fail in this endeavor. Symantec has largely failed in this regard. If however McAfee succeeds in such integration (including incorporating Reconnex), it will have a substantial competitive advantage
• McAfee needs to build better awareness of its general content control and security capabilities in order to capitalize on its Reconnex investment
• McAfee will no doubt give thought on how best to retain engineering staff, whose stock options are worthless

Other Ferris Research Comments

• Sensible move by McAfee
• Part of a general trend of rich but stable anti-virus firms seeking to build their security portfolio
• Reconnex had effective marketing communications program; underlying sales were not commensurate

Got Useful Info on This Deal? Tell Us About It!

… David Ferris

Common sense tells us that large mailboxes will slow the performance of Exchange Server. But are you aware that item count is the real nemesis of Exchange performance? We recently found this TechNet article, which does an excellent job of explaining the difference between mailbox size and item count — and explains the corresponding impact on Exchange Server performance.

Here’s a brief excerpt from the article that makes a key point about item count:

Understand that most performance issues are not the result of large mailbox size (defined as a mailbox that is larger than 2GB), but instead the number of items in the folder or folders that are being accessed on the server. Having many items in a folder adversely affects performance because operations in those folders will take longer. In particular, performance is largely influenced by the number of items in the critical path folders: Calendar, Contacts, Inbox, and Sent Item folder.

We urge everyone who is responsible for Exchange Server to carefully read and understand this article. We live in a time where rapid mailbox growth is the norm, and it is critical for the successful management of Exchange that we manage email storage growth with a complete understanding of how Exchange works.

… Bob Spurzem

LiveOffice, a hosted email archiving service, has an interesting trade-off between functionality and user friendliness.

The service is typically used by organizations with 100 to 1,000 employees. So it doesn’t have all the bells and whistles that a large organization needs. For example:

• Search is mainly oriented to keywords, and standard email metadata such as TO and FROM addresses and dates. There’s no concept search.
• The granularity of access controls is limited.
• All tags are informally defined on the fly by users.

The lack of these bells and whistles translates to a service that is much more user- and administrator-friendly than it would otherwise be.

…David Ferris

If you’re like many in the corporate world, you probably spend a substantial amount of time triaging your email. Afraid to miss an important email, you likely use a combination of rules, folders, flags, and categories in your triage. Some of you are “filers,” placing email neatly in a carefully organized set of folders — arranged by project, by topic, or perhaps by individual. Many of you are “pilers,” letting email pile up in your inbox and constantly trying to get through as much of it as you can. If you’ve been doing this for years, you’ll know that there are parallels between email triage and playing a Whack-a-Mole game.

While many have taken a behavioral approach to the issue, throwing end-user training at the email overload problem, numerous third-party players have come up with software solutions to help you triage your email. ClearContext allows you to prioritize your contacts, provides prioritized views into your inbox, and allows you to defer entire conversations for future processing (my favorite feature). Our friends at Xobni flip things around and show you a person-centric view of who you communicate with most, what attachments you last shared with that individual, and that person’s pertinent contact information (with Skype and calendaring integration). The guys at Sperry Software sell add-ins like their Reply To All Monitor to tackle things one feature at a time.

But we want more. It’s not enough to simply move things around our inboxes. Why not work with the archiving vendors and move data straight to the archive instead of to myriad folders in the inbox? Why not create a pseudo-quarantine folder in the archive -– for all those emails from the help desk, from mailing lists and alerting applications, and similar corporate “spam” — which expires data after 30 days if not dealt with? Help us get the email out of our inboxes, and then dispose of it rapidly if we haven’t looked at it.

And why not help the addicts to overcome their email addictions?

… David Sengupta

I just returned from my business trip to Japan. Like many travelers, I was dismayed by the maze of communication technologies necessary to be in touch with business contacts, friends, and family during my stay.

On the flight home, I dreamed about the perfect worldwide communication technology:

• No expensive long-distance phone charges
• No confusing country and access codes
• A single identity for phone, email, and IM
• Anytime access (e.g., desktop, laptop, smartphone)
• Presence detection so friends and associates can know when I am sleeping
• Anywhere access (e.g., airports, hotels, taxis, trains, etc.)
• A built-in microphone in my laptop!

Feel free to share any ideas you may have in the comments section.

… Bob Spurzem

There is a new phenomenon happening behind closed doors in the corporate world. We call it email bankruptcy.

To illustrate, we would challenge you to an experiment. Assuming your email policies allow this, we dare you to simply delete all the email in your inbox that is older than three days and see if it causes you much grief. All of it.

Then wait for 10 days and see how much of it was really important.

Lest you think us extreme, we think you will be surprised with how much of the “work” represented by those emails simply “goes away.” After all, much of what is in your inbox represents other people’s priorities, which are usually not the same as yours.

We are hearing of more and more people who have added a regular declaration of email bankruptcy to their strategies in trying to cope with information overload.

Taming your inbox is hard, but it’s a necessary step if you are to increase your productivity and sanity.

… David Sengupta