Microsoft: Online shift is more than even Exchange
The fact that many customers are shifting from running their own e-mail servers to getting mail as a hosted service doesn't have to spell doom for Microsoft, insists Rajesh Jha, the man who heads the Exchange business.
In an interview on Monday, Jha said that, although many see the rise of services as more of a benefit to companies like Google, he sees it as an opportunity for his business.
Microsoft's Rajesh Jha, shown here in his office earlier this year, says the shift from a world of servers to a world of services need not spell trouble for the Exchange business.
(Credit: Ina Fried/CNET)"I feel we will grow our share overall with the move to services," Jha said. In particular, Jha said that Microsoft has a better option for small and midsize businesses than it did when its only option was for those companies to run their own Exchange servers. "I think we have a huge opportunity for growth. I don't think we are in a defensive position at all."
In a year in which many software businesses--including a number within Microsoft--took a hit, the Exchange business continued to grow last year, Jha said, saying that revenue for the product nearly hit $2 billion and has 70 percent market share among corporate users.
Jha acknowledged, though, that competition for the in-box is definitely heating up.
"It is where people spend more of their hours," Jha said. "It's become a real critical part of the day. Our competitors are smart. They see it too."
In addition to Google, IBM continues to push its Lotus Domino/Notes combination while Cisco has said it will have a Linux-based e-mail offering based on last year's Postpath acquisition.
Sounding a familiar refrain, Jha said that he expects customers to warm to Microsoft's strategy, which lets them have the option of running Exchange themselves or purchasing it as a subscription hosted service.
"With Exchange, we don't give them any kind of technology ultimatum," Jha said. "We don't say 'Thou shalt move to the cloud.' "
Microsoft has shifted its priorities, though. Unlike past versions of Exchange, Microsoft developed Exchange 2010 as a service first, and only later has it done the work on the server product. That server product, which has been in testing for some time and reached the beta stage in April, is now ready in a near-final "release candidate" form.
Among its features is one that lets users "mute" an e-mail thread that they are no longer interested in being part of.
Jha reiterated that the final version of Exchange 2010 should be done later this year.
"I feel pretty good about how we are tracking," he said, noting that half of Microsoft's in-boxes--some 80,000--are now on the new version of Exchange. " We'll definitely be ready this year."
During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft. E-mail Ina. 
A small org would find the $7-$10 per 100MB mailbox to be a bargain (esp. when compared to buying Exchange in-house). You could get away with an IMAP postfix server and a web-based intranet calendaring system as well. If you get over 50 people though, or have a staff that really likes to save their mails or do big attachments, the hosted mailbox route could get pricey. Also, any users in there with a Crackberry? Double the per-hosted-mailbox cost for them. Like any other aspect of running a small biz, use your head, eh? :)
As an org gets bigger, the 'clutch phase' can get a bit confusing and costly, but it doesn't have to be. One one can do OpenExchange (a Novell product) that operates well with Outlook and such for an $89 or so server license, and a somewhat decent $2000 1U server (hardware would cost the same or more for Exchange anyway). A competent admin can set something up and maintain it without spending too much time, so if you have one on staff, maybe that makes for a better route to go. Exchange (even baseline stuff) can still be a bit expensive for the 50-500 sized org, both in time and in infrastructure. OTOH, as you reach (IMHO) about 300 people, you can find it to be useful and not as over-priced, considering.
A larger org (say, 1500+ mailboxes, over 200 blackberries/smartphones/etc), and Exchange can compete well enough cost/time-wise, since by then you should have an EA agreement with Microsoft, and enough IT staff to care for and feed your mail system, among other things. This is where I currently hang out. I'm currently running a mixed 2k3 (but migrating to) Exchange 2007 ecosystem for email, calendaring, and the like. At this size, a BES server for the Crackberries helps greatly as well (got one). This size is where you discover that you have to have multiple servers (not just the BES server) if you want to run things smoothly, and you actually can get the money (even in these times) to get the gear you need.
Really big orgs (5000+) as a general rule pretty much go for Exchange and can afford dedicated email admins.
For our Exchange implementation, it was a total of around $9000-$10000 Canadian including hardware, and that services 350 users.
To do a weaker system (Google Apps) at $50/year US for 350 users (translated to Canadian funds 1.12 exchange rate) it would have cost us around $19600. Not only that, but we've had Exchange 2007 since 2007 - seriously, why pay double for something with 1/2 the functionality?
As for the comments about needing a full time Exchange admin? Get real - I maybe spend about an hour a week maintaining our Exchange environment, and thats usually just handling user service requests (adding users/adding alternate email addresses/configuring global rules for when users are off to China and don't want everyone capable of email them/etc.
A typical hosted Exchange system will cost you $7-$10 per month per user for ~100MB (often with overage charges), which comes up to $120/year per user, and you have to supply your own Outlook client. For your org, that can come up to $42k USD, or just over $47k/year CDN.
So no, Google actually has a bargain solution if you go the hosting route.
Also, for 350 users, you have to factor in your time... without asking your salary, how much extra do you think taht would cost? I'll guess 20% of a typical MCSE salary of ~$60k CDN/yr, and your $10k CDN system suddenly comes up to a yearly cost of $3k (3 year amortized costs of license and hardware) plus $20k/year.
You're at about break-even point or so of hosted vs. in-house (though where you get the idea of "half the functionality"? Dunno... sounds a bit defensive IMHO, since mail and calendaring is about all most folks actually use Exchange for).
1/2 the functionality:
Correct me if I'm wrong, these things are not present in Google Apps:
-MAPI connectivity (no requirement commit packet traffic from the client to a server to check for updates - the server pushes the traffic to the client as soon as it arrives)
-ActiveSync mail push technology - mail can be pushed to a phone rather than a phone having to do a send/receive to check for mail, and every time eating up data bandwidth limits doing nothing if no mail is found?
-User integration ****this one is huge in a corporate environment**** - can Google Apps sync the user account and password of the user so that they have single-sign-on capability across their entire network? ie: they can use the same username and password that they log on to their computer with to access their email - even if they just changed their password?
I can tell you this, prior to us moving to Exchange, we had a different mail system that did not have single sign on capability and we had a help desk person assigned to specifically assist people with changing passwords for their email or desktop because they could not remember what their passwords were between the two. Since moving to Exchange, we get almost NO calls about password problems. Right there is a savings of a full IT phone support position per year ($40K).
There's a huge factor that you didn't mention in your comparisons:
Data Security.
If you own the Exchange server, then you control it. If you let Google run your mail, then already you have a massive breach of security right there alone. Google has already admitted they use your mail to do data mining for targeting advertising purposes. The very fact that another company outside of your control has access to and actively accesses the content for their own purposes becomes a massive liability. Imagine any court case where you have to demonstrate exactly who had access to the email server... in a closed environment, it should only be your company. With Google... well, yes, we did knowingly and intentionally allow a third party company to expose our confidential data to thousands of other people completely unregulated with no control on how that data was accessed, nor how it was used or whom had access to it.
Then you have the data backup issues to deal with, but again, security issues abound.
There are other cloud services available. Unless you have a seriously strong SLA and confidentiality agreement for security set up that is enforcable in a court, then it's a *bad* idea to just willingly hand your data over to someone else to run. Even worse to hand it to someone who actively acknowledges they will exploit it.
Welcome to 21st cetury where Exchange rules.
Therein lies the rub - hosted vs. in-house. I have no need or reason to argue for or against either one, save for size. It makes no sense for a 50-user company to have or buy an internal Exchange farm, just as it makes no sense for a 5,000-user company to rely on web/hosted mail.
As for the feature list, the majority of those disappear fairly rapidly. MAPI is neat, but can be replicated by a mail client that pings its IMAP server once a minute or so (if you need your emails faster than that, then you're seriously using the wrong means to communicate something...)
ActiveSync is widely unused (though the iPhone may change that), because Windows Mobile is largely unused. If you have a BES license (hosted or otherwise) and Blackberries, you're already set no matter what back-end you use.
Single Sign-On is nice, but stored passwords on most browsers (and even most email readers) kinda moots the whole idea.
"...and we had a help desk person assigned to specifically assist people with changing passwords for their email or desktop because they could not remember what their passwords were between the two."
Good heavens, man! Most capable email clients can store that sort of thing so the client never needs to type it in but once. And if you needed an FTE just for passwords (and not just as part of general help-desk duties)... umm, dunno what to say ab't that one and remain kind about it. :/
"Data Security. "
You do realize that bog-standard SMTP sends data in the clear, right? An argument can be made that an SSL-enabled webmail session is way more secure than standard email sent from you to someone else out on the Internet (mostly because you and the recipient are often not the only SMTP server owners in the chain that your mail passes through).
But for internal-only mail, sure - I can buy the argument, and easily agree to it. Then again, is a 50-person company gonna want to spring for the ducats required to get that in their email?
Exchange mail traffic doesn't have to be sent in the open SMTP method. That's up to an admin, and if that is what they do, then that is not an admin I'd want working for my company. Security is a bit more important than that.
Still doesn't address another company controlling and accessing your data without your knowledge.
First thing you and all IT staffers should understand is it isn't a lack of intelligence that causes people that don't know how to use a tool properly (in this case email) to use it in such an off-the-wall manner. Rather, it is their lack of INTEREST in it. Absolutely nothing any software vendor can do will ever change that very basic fact. If someone doesn't WANT to know how to use it properly, guaranteed they will never take the time to LEARN how do it properly. Unless there was a mandate from the employer that an employee must reach a certain level of proficiency with a software product, why, when everything else in their life takes precidence to them, would a user want to learn how to better manage their inbox?
Their hosted Exchange and support is a PITA.
" Google Apps is nowhere near the level of an enterprise". Every company I worked for ,use mail and calendaring. Google mail works perfectly. People can even share documents. I dont have down time of a windows server. I dont have to worry about backups, It just works. Maybe you can share some light as to what Enterprise Mail refers to??? Apparently I never worked for an "enterprise" if I use your definition.
Obviously Exchange has its strong points and features that Google Apps is a long way from reaching. Still, for many users Gapps is already more than enough and it's only getting better.
Oh, and if you only want 100MB (lol) that Exchange gives you then you can use the completely free version of Google Apps, which like the free personal Gmail counterpart gives you over 7000MB.
" forgot to mention SPAM which is completely absent in Google Apps Mail, again without any fuss."
I sure wish you'd tell Google that. My email is 90% spam. I keep reporting it and after 2-3 weeks that particular flavor of spam disappears, but there's always a ton of other stuff going on at the same time.
But that said, I still use gmail for my personal mail.
- by randy620 August 18, 2009 2:35 PM PDT
- only on CNET would someone try to compare Exchange to Google docs. I think tomorrow I will compare my car to peanut butter. That peanut butter sure costs less than my car. Jiffy is going to wipe the floor with Toyota!
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- by Vegaman_Dan August 18, 2009 5:32 PM PDT
- Bah! Obviously you know nothing! Peterpan is SO much better than Ford.
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- by codynews August 19, 2009 6:31 AM PDT
- @Vega: NOW you tell me *sniff*, where were you yesterday before I traded my Honda for some Skippy.
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