Enterprise Hosted Services (EHS) provides e-mail filtering, storage , and encryption features designed to improve the security and availability of messages for large organizations while meeting internal- and regulatory-compliance requirements, such as the Sarbanes-Oxley Act.

Given the popularity of Exchange, Microsoft is in a strong position to capitalize on hosted-messaging services, said Yankee Group analyst Sandra Palumbo. "With the hosted model, archiving, security, and storage are handled by service providers rather than by the enterprise."

Commodity Services

The North American market for e-mail-management software has matured to the point where the services are widely considered to be commodities.

If messaging vendors want to survive and thrive, analysts have said, they must position themselves differently from other e-mail vendors and offer value-added services in addition to basic e-mail.

The EHS/FrontBridge technology is designed to do just that -- bring better capabilities to Microsoft Exchange users. According to Microsoft, the technology not only will help make archived e-mail abide by existing legal requirements, but also will help corporate users access the massive amounts of messages stored on enterprise servers.

Indeed, some 75 percent of an organization's collective knowledge resides in its e-mail system , according to research by Frost & Sullivan.

Moving Toward Integration

In accord with the general industry push to offer better corporate-messaging capabilities, e-mail systems are moving toward integration with customer -relationship management (CRM ) systems and business-intelligence applications.

Ideally, such integration would produce an e-mail system that is integrated with instant messaging, conferencing, and presence-management capabilities. The idea is to provide technology that alerts users about whether a contact is on the phone, at his or her desk, or is otherwise available.

"Businesses have been clamoring for the leading e-mail providers, like Microsoft, to enhance the capabilities of mail servers," said Forrester Research analyst Erica Rugullies. "[With the new services,] Exchange customers won't have to seek out a third-party product for archiving and e-mail management."

Forrester projects that the messaging-archive market alone will grow to $1 billion this year from $197 million in 2003. The biggest drivers are regulatory compliance, legal discovery, and mailbox management, Rugullies said.

"This is drawing interest because it also has the potential to let large organizations mine the information stored in the archives and locate intellectual property, getting more value from their storage systems," she added.

On April 1, EHS will be available in North America, Latin America, Europe, the Middle East, and Africa. The services will become available in the Asia Pacific region later this year.