Look Who's Leaving SaaS Entirely to Partners

Within the next few years, I believe virtually all major technology companies will offer SaaS (software as a service) options directly to customers -- in some cases, circumventing channel partners and managed service providers. But two fast-growing software companies are taking a stand against my assertion -- directing all SaaS opportunities to channel partners and managed service providers. Here's the scoop.

Zimbra (owned by Yahoo) and Open-Xchange compete in the open source email market. Together, they represent about 60 million paid email inboxes.

  • Yes: 60 million inboxes
  • Yes: paid inboxes
At first glance, SaaS is a natural market opportunity for both Zimbra and Open-Xchange. Yet both companies say they will leave SaaS -- the hosting of their software -- entirely to their partners. Somwhere, Zimbra and Open-Xchange VARs, MSPs and hosting companies are rejoicing.

The Bigger Picture

That's intriguing. From Dell to Microsoft, major IT companies are competing and cooperating with their partners in the SaaS market. And frankly, I think MSPs need to get used to the competition. I'm on record stating that all MSPs should expect their IT vendors to eventually offer direct SaaS options to corporate IT departments.

But Zimbra and Open-Xchange are bucking that trend and directing all hosted email opportunities to partners. So far, the strategy seems to be working out well for both companies.

Roughly two-thirds of Zimbra's 700 channel partners are managed service providers (MSPs) and application hosting firms. And 70 percent of Zimbra's revenue comes through partners. Zimbra plans to launch a more formalized partner program within weeks.

At Open-Xchange, the company has gained momentum in multiple regions -- working particularly well with service providers across Europe and nearing 10 million paid inboxes.

Risky Business?

Still, deferring all SaaS opportunities to partners involves some risk for both Zimbra and Open-Xchange. If they company's partner network doesn't grow, thrive and support profitable MSPs and hosting providers, Zimbra and Open-Xchange could lose momentum in the SaaS world to Microsoft and other entrenched email giants.

I'm certainly intrigued to see how the Zimbra and Open-Xchange strategies play out.

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