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August 29, 2008

Early this morning, Cisco said it is acquiring all the outstanding shared of PostPath, a developer of the Linux-based Exchange server replacement PostPath Server. PostPath is best known as a drop-in replacement for Microsoft's Exchange eMail Server.

Unlike other would-be Exchange competitors Scalix and Lotus Domino/Notes, which use a Outlook-compatible Mail Application Programming Interface (MAPI) on the client PC, PostPath actually reverse-engineered Microsoft's MAPI and Active Directory (AD) protocols.

This simply means that, from the network and Windows PC's viewpoint, PostPath actually appears to be an Exchange server to the outside world...

An open source project called OpenChange is now working with the Samba Group (now called Joomla) using this information to build open source implementations of Microsoft Exchange Server and Exchange protocols. No commercial open source business is currently following up on OpenChange's efforts, though, according to Sarah Radicati, CEO of The Radicati Group.

With its acquisition of PostPath, Cisco plans on extending the email and calendar functionality of its SaaS (software-as-a-service) based WebEx collaborative platform, which already incorporates instant messaging, voice, VoIP, video, data, document management and Web 2.0 applications.

Doug Dennerline, Cisco's senior v.p. of the Collaboration Software Group said "the acquisition of PostPath complements our strategy to develop an integrated collaboration platform designed for how we work today and into the future, providing real productivity gains and a more satisfying user experience."

While PostPath is the only Exchange challenger that has used reverse-engineering to challenge Microsoft, its controversial approach may be adopted by other open source companies. In 2006, when the European Commission forced Microsoft to open up the Common Internet File System (CIFS) and AD protocols, it also forced the company to open up the MAPI protocols at the exact same time.

This has extremely strong and critical ramifications for the Linux community as well as for open source developers as a whole, and will bring about more changes to an already fragmented market.

If this sounds like a challenge to Microsoft and Exchange -- which, according to a recent Ferris Research survey has a business email market share of 65 percent -- IT IS!

"We have been unhappy with Microsoft for some time before the release of Exchange 2007, which included VoIP in its Unified Messaging suite. It was time to offer our customers an alternative," this according to a highly placed source at Cisco which asked to remain anonymous.

Cisco had long been a VoIP leader using the Session Initiation Protocol (SIP), which Exchange 2007 also now supports. Cisco CEO John Chambers said, during Cisco's last quarterly report, "If you think about what we're going to do, we usually acquire when we move into new markets that we do not have the expertise for the product segments in."

At the same time, Cisco's PostPath acquisition does fit in very well with Cisco's existing WebEx Connect e-mail collaboration platform. Cisco was quick to make this very point in its announcement of the deal.

Ferris Research analyst Richi Jennings thinks Cisco made a great deal. Jennings says, "Once again, Cisco makes a sound investment in a major email technology vendor, just like it did with IronPort," an email security appliance provider.

As for PostPath, Jennings says, "These are the clever guys who reverse-engineered the Exchange client protocol, MAPI/RPC, and the related on-the-wire details needed to make a vanilla install of Outlook talk to a non-Exchange mail server with full fidelity.

Of all the other Exchange alternatives, PostPath has the most interesting architecture.

And I say that as one who has for years 'emotionally invested' in the OpenMail technology" -- which served as the foundation for Scalix.

Overall, Cisco observers in the networking industry had been hoping that Chambers would start acquiring more companies again, since it is widely believed that he would only OK any new Cisco acquisitions if he believed the market had finally bottomed out.

As for what Cisco plans for the next twelve months, Jennings says, "it sounds like Cisco wants to offer SaaS collaboration, based on PostPath and WebEx. Whoever said the email world has become dull and uninteresting?"

Cisco will pay approximately $215 million in cash and stock in exchange for PostPath's shares. The acquisition is expected to close in Cisco's first quarter of fiscal year 2009. Upon completion of the acquisition, PostPath employees will become part of the Cisco Collaboration Software Group.

In analyzing the acquisition, Jennings says "I think Cisco started having problems with Microsoft a while back. I guess it has something to do with VoIP support in Exchange and how Cisco thought it was Microsoft's partner but it turned out that Microsoft was actually competing with them."

Source: E-Business News.

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