HP, Critical Path to offer hosted messaging services

Carriers, service providers and other businesses will have a new option to turn to for hosted messaging services next year thanks to a worldwide partnership announced Thursday between Hewlett-Packard Co. and messaging vendor Critical Path Inc.

Starting in the first quarter of 2003, the companies will jointly sell and support hosted services including e-mail, instant messaging, wireless access, group scheduling and file storage. The services will be based on Critical Path's messaging software and hosted on HP servers at its data centers in Europe, North America and Asia, the companies said.

The services will be pitched as a way to help businesses cut costs, free up IT resources and tailor messaging applications more easily for specific groups of users. They will be aimed at carriers and other service providers, corporations looking to replace existing e-mail systems or extend them to workers in factories or remote locations, and small business/home office users.

HP already offers hosted messaging services based on Microsoft Corp.'s Exchange software and will continue to do so. It chose to add Critical Path to its roster in part because its software is popular among carriers, and the deal will help HP to compete more effectively in that market against Sun Microsystems Inc. and IBM Corp., said Joe Hogan, vice president of marketing for HP's managed services group.

Critical Path, in San Francisco, has two parts to its messaging business. It develops a suite of messaging products that it has licensed to about 200 carriers and 750 enterprises around the world for deployment in-house. That business accounts for about 70 percent of Critical Path's software revenue, said Bill McGlashan, Critical Path's chairman and chief executive officer.

The other 30 percent comes from its hosting services, which currently consists of Web-based e-mail services used by about 500 carriers, service providers and large corporations, he said.

With the HP deal, its hosted offerings will expand to include other capabilities in its software platform such as instant messaging, wireless access and file storage. It means, among other things, that small businesses will have access to "an enterprise-class e-mail system" at an affordable price, instead of having to rely on the free public e-mail services, McGlashan said.

Details about pricing won't be revealed until the service is launched early next year, he said. For customers, the first line of contact for support calls will be HP, though Critical Path will handle technical support questions at the application level. McGlashan insisted that the transition for its current hosting customers will be "seamless."

Outsourcing its data center operations to HP will also allow Critical Path to focus its resources on developing the messaging products it sells. With the help of HP's sales and support teams, the deal should also help Critical Path reach more customers and provide better service, he said.

The company could use a lift. In August, Critical Path reported a net loss for its second quarter of US$35.6 million according to Generally Accepted Accounting Principles, on revenue of $22.4 million. Earlier this year it was shaken when a former president, David Thatcher, pleaded guilty to securities fraud, admitting that he had conspired to inflate the company's revenues for the third and fourth quarters of 2000.

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