LiveOffice launches a free e-mail continuity offering as a loss-leader for its archiving service.Yesterday, LiveOffice launched Mail Continuity, a free service that lets employees continue to send and receive e-mail if Exchange goes down.

CEO Nick Mehta hopes companies that take advantage of the service will then sign up as paying customers of LiveOffice's archiving and Exchange hosting services. LiveOffice targets companies with a few hundred to a few thousand users.

It's an intriguing offer, and a bold way to draw customers to the cloud market. However, in my opinion offering e-mail continuity as a loss leader carries risks.

First, Microsoft also offers a package of hosted Exchange services aimed at small and medium-sized enterprises, including archiving and continuity. If there were ever a company that could afford a price war, it's Microsoft.

Second, I think LiveOffice is taking a chance of being dragged under by companies that take full advantage of the free service without ever signing up for paid subscriptions. The Streamload/MediaMax/The Linkup debacle exemplifies just how many things can go wrong with the service model: free users rack up data that has to be managed at a loss, engineering mistakes delete the data of paying customers (most of which was later recovered), and some users can't get access to their information because it's stuck in a technical and legal limbo.

Granted, Streamload was aimed at consumers rather than business users, and business customers that are looking for continuity services probably also have a need for archiving, reducing the risk from freeloaders. But it raises hard questions that potential customers should ask of any provider.

In any case, it's a bold move that should attract the attention of competitors. In addition to Microsoft, there are a number of companies in the e-mail continuity space that target small and medium-sized enterprises, including Dell MessageOne, Azaleos, and Geminare.

Note that Azaleos requires appliances to be placed in at least two separate offices for its continuity offering. Meanwhile, Geminare offers continuity for databases as well as e-mail.

Customers who sign on the for the LiveOffice service have to do two things: reconfigure Exchange to route internal and external mail through LiveOffice's network, and push out a Web Folder to Outlook users. This folder lets users access the mail in LiveOffice's data center directly from their Outlook clients. LiveOffice also offers a browser-based interface for end users.

Once the company has signed on to the service, it keeps a running copy of every inbound, outbound, and internal message sent for seven days. On the eighth day it gets rid of the first day's batch of messages.

If and when a customer's Exchange server goes down, the administrator informs LiveOffice via a Web interface or toll-free phone number. At this point, the service stops deleting any week-old messages and will save everything for as long as the customer's Exchange infrastructure is offline. In the meantime, users can read, send and receive messages from Outlook or a Web client as they normally would.

I'd like to hear from our readers about this offering. Does the continuity offer intrigue you? Make you wary? Or both? Let me know.