The frequent Gmail outages and the huge cost involved in Microsoft Exchange’s email service have made business houses think twice on their email services. Witnessing the bewilderment within the enterprises, the software giant IBM has leaped into the market as their first major alternative. IBM has come out with the cloud based email service called LotusLive iNotes.

iNotes’ target is the large enterprises that want to migrate an on-premise email system to SaaS (software as a service). The email sync is also to grab the opportunity to win customers from Microsoft who aren't ready to migrate to the upcoming Exchange 2010 release. The long presence in the market is a de-facto advantage that Google or Microsoft have enjoyed against small players, and this would be cut short by IBM’s entry. IBM has a much larger sales force and relationships with corporate customers since 1911. Moreover, the cloud based email sync comes at a price of $36 per user per annum, compared to Google’s $50 per user or Microsoft’s $119 per user.

The competition comes neat, but there are glitches however. The 1GB storage capacity in IBM’s iNotes is a huge setback as Google has 25GB capacity with a comprehensive office suite tucked along. “IBM's positioning of their iNotes product seemed to be more of a complement to their on-site solutions than a replacement for Google,” says Andrew Kovacs, a Google spokesperson. The Google Apps system works with Microsoft Outlook and mobile phones including iPhone, Android, Windows Mobile, and Blackberry.

Gartner analyst Matt Cain also maintains that pricing strategy may not work for Microsoft as the company already has a $3 per month Exchange Online option called Deskless Worker. Considering the read-only access to email, calendars, and Sharepoint in Deskless Worker, the Microsoft suite will hardly be a competition. A boost to the iNotes’s storage capacity without a price increase can work for IBM.