Cisco Terminates Cloud Email ServiceCisco Terminates Cloud Email Service

Cisco on Monday announced the discontinuation of Cisco Mail, its hosted email service, a move that casts a pall over the company's other collaboration efforts.

Debra Chrapaty, a former Microsoft executive hired in late 2009 to helm Cisco's collaboration software group, broke the news in a blog post.

"[Cisco Mail] has been well received, but we’ve since learned that customers have come to view their email as a mature and commoditized tool versus a long-term differentiated element of their collaboration strategy," she wrote. "We've also heard that customers are eager to embrace emerging collaboration tools such as social software and video."

These findings, she explained, had led Cisco to cease investment in its hosted email service in order to focus on other aspects of the collaboration market.

Cisco Mail was introduced in November 2009 in a limited release. According to Gartner analyst Matt Cain, the service managed to attract about 30 corporate customers that paid for about 3,000 seats.

In a draft of a research note he's writing on the demise of Cisco Mail, Cain finds Cisco's rationale for entering the hosted email market sound, but its execution and understanding of the market lacking.

The company's plan, he says, was to build a collaboration stack that rivaled Microsoft, with its VoIP assets as a point of differentiation. It spent $215 million on Exchange-compatible email provider PostPath in 2008 and set about trying to take its technology into the cloud.

The effort appears not to have gone well. PostPath founder Duncan Greatwood left the company last year and Chrapaty was left to clean things up. Cain points to the repeated delays in moving Cisco Mail to general availability as the clearest sign that the project was having problems integrating Cisco's VoIP and WebEx technology.

By pulling out of the hosted email market, Cain says that Cisco is betting email has become commoditized and is focusing its collaboration efforts on activity streams, social media, real-time services, and Web conferencing.

But the company's strategic retreat has the potential to become a rout: "The conventional buying pattern," Cain's research note says, "has been that the incumbent email supplier is in the best position to supply these adjacent collaboration services due to the advantages of product bundling, infrastructure re-use, and multi-modal integration in the client."

Providing email service to companies, in other words, is likely to help sell other other services. Consider how well Google has done moving Gmail users to Google Apps.

On a positive note, Cisco's exit from the hosted email market will free up technical talent at the company, thereby allowing enhancements to collaboration services that may have better growth potential than email.