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Who in their right mind would choose Notes over anything else (Gmail, outlook, pine, telnet)?
Not only that, but which corporation would outsource their email to a third party like IBM, Gmail, Microsoft or anybody else for that matter ?

I know that plenty of companies do it, but I really wonder if they've thought it through.

Email services are not just an expense item to be outsourced, it's a very critical item that is best kept in-house under your own control as much as possible.

Even if you hire IT staff, how much of it is really under your own control? Do you really control your IT staff more than you control an outsourcing firm?
I'd say yes. They have a direct stake in the well being of the company. A free or nearly free email service provider does not.

You can't outsource responsibility.

People working for you have a contract with you, and a detailed list of their responsibilities.

I'd trust them a lot more than some large company providing a similar service for free or a really small fee. The incentives are completely different as is the relationship.

If you have ~250 employees you are stuck in the black hole where you can't directly higher top tier talent to handle email, but you start to need actual infrastructure. Paying Google 1250$ a month is probably the best you can reasonably do without paying ~10x that for single competent staff, HW, software, and a significant support contract.
gmail has a contract too, it's called an SLA. why should j-random business trust the part-time IT guy hired from craigslist more than the engineers at google?
I had an interesting conversation with one of the Lotus directors a few months ago -- he truly believes that Notes is better than Gmail from a user experience perspective.

If IBM's offering is anything like the internal iNotes they piloted, I feel bad for any company that makes the switch. iNotes was a perfect opportunity to redo the Notes UI and catch up with the rest of the world with respect to email usability. Instead, they just wrapped the crufty old Notes into a shiny web container.

No doubt this is part of a play to keep Notes customers after google provided a migration path away from notes. It will be interesting the next few years, when corporations upgrade their old desktops from XP to something else, whether they take the chance to move from notes.
Notes migrations are already happening all over the place -- only it's SharePoint that many corps are moving to, for better or worse.
In my time in the corporate world I much preferred Lotus Notes to Outlook for email, calendering, etc. And generally, you also had Notes development occurring which provided useful applications for the department. All IBM really needs to do at this point is develop and announce an 'App Store' for Notes and they'd be the hot topic again.
$14 dollars less, but only 1 gig of storage - compared to Google's 25. 1 gig is laughable in the age of sub $100 TB disks.
IBM "wishes" it undercut Google with discount e-mail service
"None of those features are included in IBM's package.

Even so, IBM believes its service, called LotusLive iNotes, can beat Google because it has a much larger sales force and relationships with corporate customers going back long before Google co-founders Larry Page and Sergey Brin were even born in 1973."

I give up.

This quote is one of the better mainstream-media explanations of cloud computing I've seen:

"Armonk, N.Y.-based IBM is responding to the increasing corporate demand for inexpensive e-mail that's run on computers owned by an external supplier instead of the company relying on the service. This approach has become trendy enough to get its own catch phrase - "cloud computing.""