For all intents and purposes, the corporate e-mail market is locked up.

Between them Microsoft (stock: MSFT) and Lotus Development (stock: IBM) have pretty much got corporate messaging in the bag, leaving a little room for Novell (stock: NOVL), according to most experts. Numbers can shed light on the story. Lotus Notes accounts for 25.4 million seats of messaging vs. 22.8 million for Microsoft Exchange and 14.5 million for Novell Groupwise, according to Messaging Online, a New York-based, online newsletter.

One observer likens Lotus Notes and Microsoft Exchange to Windows and Macintosh.

"They are basically the operating systems for corporate messaging," said Eric Arnum, editor of Messaging Online. "If you come in with a third, I'm afraid that no matter how good it is, you'll have sort of an OS/2 situation on your hands. Every OS/2 user will agree it was better than Windows, more robust even than Windows NT. A lot of good that did them."

But still, there may be some breathing space around the edges for new players who don't take the software monoliths head-on. "There's plenty of room for hosted services, no room for software," said Mark Levitt, research director for IDC, Framingham, Mass.

Companies like Instinctive Technologies, recently renamed eRoom, Cambridge, Mass., have good growth potential, Levitt said. Eroom offers Web-based collaborative work spaces, not messaging per se.

"For in-house corporate messaging, Microsoft, Lotus, and Novell are it, but companies doing team collaboration, unified messaging services, and who provide outsourced services could do well," Levitt said.

Shirish Nadkarni, founder of TeamOn.com, in Issaquah, Wash., said he hopes Levitt is right. TeamOn targets smaller companies that do not want to manage or support the overhead of corporate mail systems, some of which are quite resource intensive. Ironically, he is a 12-year veteran of Microsoft and TeamOn is backed by such other former Microsoft heavyweights as Pete Higgins and Sam Jadallah.

TeamOn is trying to bring business functions to Web-based mail. Its service lets companies develop and use multiple distribution lists, for example.

"There is a large opportunity among the 50 percent of the market already connected to the Internet," he said. TeamOn is banking that a lot of these people who start out with free Web-based mail services offered by ISP will want to graduate to more business-appropriate mail from his company.

Sally Kernan, president of Information Technology Network, a recruiting firm in Redmond, Wash., did. Her company, which relies on dispersed personnel, including contractors, in the past had to set up mail accounts with ISPs. And, it usually took the ISP two to three days to set up corporate aliases for her people, she said. Now the company uses TeamOn not only for messaging, but as a data repository for time cards, human-resource documents, and other information.

Ray Griffin, founder of the Federal Way School, in Federal Way, Wash., was intrigued enough to try TeamOn.

"The job of a school principal is fractured," Griffin said. "One minute you're talking about student problems, the next about fundraising. It seemed logical that there be a way to organize all those constituencies."

Another plus was the fact that Web-based e-mail is accessible from any Web-connected device. And the outsourcing aspect was the clincher.

"People are sick of buying bigger and bigger servers," Griffin said. "Let them do that and the software programming, and we just use the stuff."

TeamOn offers the service free up to a point. Each company gets 50 Mbytes of storage space. Once it grows beyond that and/or beyond 20 to 25 people, it provides a fee-based service costing $5 to $10 per month per user. There is no advertising or video and the user companies can do their own branding, Nadkarni said.

There are other niches of opportunity to be found around Notes and Exchange.

"Antivirus is one that comes to mind," said David Ferris, president of Ferris Networks, a San Francisco research company. "Viruses generally come in by e-mail, and Network Associates and Symantec and Trend Micro have done good business in that market. A niche market that's probably worth $300 million a year."

People have barely scratched the surface of outsourcing, Ferris said.

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