Microsoft Offers Hosted Exchange, SharePoint, OCS to All

Microsoft announced the beta version of a hosted version of its messaging and collaboration suite. Microsoft Online Services is aimed at IT staff, unlike Microsoft Live Services, which are purchased by consumers.

Highlights of Online Services:

  • Provides hosted Exchange, SharePoint, Office Communications Server, LiveMeeting, anti-virus/anti-spam/anti-malware.
  • OCS and instant messaging/presence aren't initially available; they will be released to beta in 2H08.
  • Administration console lets IT configure its own environment, provides migration tools, trouble ticket support, configure SharePoint, and so on.
  • Above 5,000 users you can have your own dedicated machines.
  • You can run a mixed in-house and hosted environment.
  • Initially, there will be places at which hosted functionality falls behind the in-house versions. Over the next year or two, the hosted version will reach parity.
  • Pricing's not announced yet.

Our thoughts are:

  • This is an exciting and important announcement.
  • The arguments for hosted messaging are very strong, for organizations of all sizes. Yet outsourcing has been slow to catch up. Microsoft is helping to validate the hosted market.
  • If this performs more or less as described, it should be very well accepted among organizations of all sizes.
  • Over the last 10 years, Microsoft has had several attempts at bringing hosted versions of Exchange to market. The offerings haven't done well, despite very visible partners and lots of publicity. So it's not a foregone conclusion that Online Services will succeed.
  • If the hosted code is mainly the standard code of Exchange 2007, SharePoint 2007, etc., then the offering may well prove a disappointment. Hosted code needs to be architected as such from its inception.
  • Our sense at this time is that the initial offering will be on standard existing Office server code. We hope we're wrong.
  • A pricing of $2 to $5/user/month, with some level of support to IT, would be very attractive to users. The market can bear substantially more than that, and it wouldn't be surprising if Microsoft changes up to $20/user/month for the full range of services. However, pricing at $2 to $5/month will be sufficient to create a substantial market for competitive solutions, to be sold to and by service providers.
  • Statutory bodies are pressing Microsoft to decouple its client software from its servers; e.g., to publish the details of MAPI. Microsoft is resisting doing so. As it opens up its messaging protocols and APIs, there will be more competition for Online Services. That will be good for everyone, including Microsoft.

... David Ferris

One Comment

  1. Jeff
    Posted March 3, 2008 at 6:16 AM | Permalink

    David – This is a very interesting announcement. Do you have any insight as to whether this puts Microsoft in competition with it’s partners who have been providing these services for years (, Intermedia, Apptix, etc)? Or will MSFT be using these partners to provide the newly branded service?

  2. Posted March 3, 2008 at 10:17 AM | Permalink

    All things being equal, it’s a direct threat to the partners. The good news however is that it validates their market. So even ‘though Microsoft will presumably get far more business than they do, they can probably do well by either more aggressive pricing, or satisfying niches that Microsoft doesn’t.

    Net is: It’s good for alternative hosted Exchange services.

  3. Posted March 3, 2008 at 2:59 PM | Permalink
  4. Posted April 29, 2008 at 6:01 PM | Permalink

    Hi David,

    How does this affect 100+ companies that are hosting Exchange based email services?


  5. dferris
    Posted April 30, 2008 at 4:08 AM | Permalink

    Gautam–Thanks for the posting. See my post of May 3 above.

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