Microsoft Online Collaboration Prices to Decrease

Microsoft charges around $15/user/month for:

  • Exchange Online (email/calendaring/address books)
  • Office Communications Online (presence/instant messaging)
  • Office Live Meeting (Web conferencing)
  • SharePoint Online (shared spaces/workflow management)
  • Exchange Hosted Services (email archiving, spam and malware filtering)

Microsoft will have difficulty maintaining its online pricing at this level:

  • The underlying costs of providing equivalent functionality are much less. Third parties using other code bases will compete.
  • Google is developing a rich competitive offering (though Web only) at a significantly lower price point.
  • Cisco will soon offer a hosted-Exchange-equivalent service, via its PostPath acquisition. Cisco may be able to charge less because it's using non-Microsoft code. Whether Cisco will be able to offer AD federation remains an open issue.

Our best guess is that come 2013, normal industry prices for hosted Exchange/SharePoint/malware control/archiving/instant messaging will be $2 to $3/user/month. If that's so, this is likely to have a serious and adverse effect on Microsoft revenues.

... David Ferris and Nick Shelness

One Comment

  1. Posted February 25, 2009 at 10:31 PM | Permalink

    This is interesting given we would charge about $9 for this (less Sharepoint).

    I can’t see it going this low, that is $2-3, mainly because all of the credible providers have license agreements with various anti-virus, anti-spam, image filtering etc vendors that can take a dollar or so per seat.

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