The deal, which is expected to be announced on Tuesday, will align Critical Path with Japan's largest long-distance telephone company and one of the country's largest industrial and technology conglomerates. That will give the comparatively young U.S. email company broad leverage in persuading Japanese businesses to adopt the new joint venture's mix of Web message services, or so Critical Path executives hope.
"We didn't think we would get the amount of business we wanted quickly enough doing it ourselves," said Mike Warson, Critical Path's Asian business manager. "This gives us an immediate leverage point from a sales and marketing perspective."
Critical Path has been one of the most successful companies to provide outsourced Web email boxes in a now-crowded market, winning contracts with some of the biggest Internet sites and telephone companies in the United States. But it's recently been put under fresh pressure as newcomers to the business add services like voice mail and faxes to their product portfolios, and by customer service problems.
The company has responded with its own fax service, as well as an assortment of other services like calendar and data storage applications. But it's also looking at newly growing markets like Asia, where analysts say adoption of Web services is a year or more behind the United States.
Initially, the new venture--which hasn't yet been named--will focus on Critical Path's existing range of Web-based services, selling the full portfolio to other large Japanese companies. As in the United States, these customers will put their own brands on the services, so individual consumers will have little awareness of who is providing the underlying technology.
Already the new company has a few blue-chip clients on tap, including Japanese giants Fujitsu and Nikkei, according to Critical Path.
But because the Japanese market is more dependent on cell phone technology than its U.S. counterpart--NTT's mobile phone affiliate alone has close to 23 million users, far more than any U.S. company--Critical Path says it plans to move its services onto mobile phone platforms soon.
"We have a very compelling story to tell to wireless partners," Warson said. "We've got a huge internal initiative going, with (wireless) products close to release."
The company will be facing competition in the market, however. Commtouch, another email outsourcer, already provides some Web-based services for another division of the sprawling NTT.
And newcomers like Onebox.com, which are focused more heavily on the wireless and voice messaging market, will also be trying to sell their services in the Asian market, with particular focus on the profitable phone carrier market.
"We would expect to see (Critical Path) anywhere we go," said Ross Bott, Onebox's CEO. "But there is a huge number of customers out there. So we should both have a lot of fun."
Financial details on the joint venture aren't yet available. Critical Path executives said they will have seats on the new company's board of directors, but that Mitsui and NTT representatives will have more control over day-to-day management of the company.