Those are really the two principle avenues for email archiving. A "hosted" system is basically an archiving system that is contracted through an outside company. It's an outside service that connects into your email server(s) and captures email as they come through -- moving and storing the email offsite at a remote location. Hosted services are either priced by mailbox-per-year or by the amount of storage consumed.
Hosted email archiving systems are relatively fast to get up and running. There's nothing for the customer to buy. The outside company is doing all the work and providing all the solutions; they're just hooking into the company's email system. The upfront cost is also reasonably low because, unlike in-house email systems, there are no initial capital expenditures for equipment or software.
The advantage of an in-house email archiving system is that the customer has much more control over the platform. But with daily control comes daily responsibility, so beyond the sizable investment, the user must also find, hire or rely on consultants for the expertise needed to setup and manage the email archiving system to meet regulatory or litigation requirements.
Another advantage of a hosted system is that the outside provider typically has staff expertise that can help customers meet their regulatory requirements. For example, there are HIPAA requirements for healthcare providers, SEC requirements for financial institutions, banking regulations, SOX for publicly traded companies, and so on. A hosted solution provider will have people on staff that are well versed in these regulations and know how each type of content should be retained. Once the hosted system is setup, that staff can set policies to automatically store email, track lifecycles and delete the data when the retention period expires. For an in-house system, you have to "purchase" that expertise so that you can set your own policies.
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