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Big Business of Fighting Spam to Get Bigger

The mostly fruitless fight against unsolicited commercial e-mail has created many headaches along with a billion-dollar industry to fight it.

The Radicati Group, Palo Alto, CA, this week estimated that the market for spam-fighting software and other measures will reach $979 million this year, thanks to a 50 percent rise in demand over the past 12 months. The researcher forecasts that the market will reach $1.7 billion by 2008.

The high stakes in fighting spam were highlighted earlier in the week. Brightmail, a top spam-fighting company, filed for an initial public offering that could raise it $68 million. According to its Securities and Exchange Commission filing, Brightmail made $1.2 million on $26 million in sales in the year ended Jan. 31.

Brightmail, founded in February 1998, notes that it suffered losses the previous years. Its improved financial picture coincided with the worsening of the spam problem.

According to Brightmail's Probe Network, which deploys dummy accounts to identify and block sources of spam, spam as a percentage of e-mail traffic rose from 40 percent at the end of 2002 to 62 percent in February 2004.

Radicati Group expects spam will continue to increase, growing from 15 billion messages last year to 142 million in 2008, when it could account for three out of four e-mails.

Despite efforts by large ISPs to ferret out and prosecute spammers, the researcher expects new avenues for spam, such as instant-messaging software. This year, Radicati Group expects IM spam will triple to 1.2 billion messages.

This could become good news for companies like Brightmail, which boasts it protects 25 percent of e-mail in-boxes through its 2,000 customers. In addition to corporations, it has deals with top ISPs like MSN and EarthLink. Radicati Group expects 55 percent of all e-mail boxes to have some kind of anti-spam tool by the end of the year. By the end of 2008, it expects 66 percent will have one in place.

The researcher estimates that 300 companies provide some type of anti-spam service but that in the future anti-spam services will be part of an overall e-mail security package.

“It's very saturated right now,” said Janice Yee, an analyst with Radicati Group. “We anticipate that during this year there will be a lot of consolidation.”

Businesses and ISPs will continue to pay the costs for the rising anti-spam market. According to an earlier study by Ferris Research, spam cost U.S. businesses $10 billion to $13 billion last year in lost productivity, IT resources and help desk costs.

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