Microsoft

Microsoft said Monday that it's cutting by a third the subscription prices for the hosted versions of Exchange, Sharepoint, and Office Communications Server.

The software maker plans to cut the monthly per-user cost of licensing all three products from $15 to $10, while the cost of licensing individual products is also dropping by as much as 50 percent. The move comes as Microsoft faces continued pressure from rivals, including Google.

Last week, the city of Los Angeles voted to go ahead with a deal to shift many employees to Google Apps from Microsoft Office.

In an interview, Microsoft Vice President Chris Capossela said the move has less to do with competitive pressure than that "it's the price that customers are really excited to buy our suite at."

,p> "We're pretty excited about the price and not so much focused on free services or the price Google or others might charge," Capossela said.

In addition to the price drop, Microsoft is also touting several new customers and announced its plan to bring the year-old Microsoft Online services to more than a dozen new countries.

The company is announcing its commercial launch in Singapore, as well as trials in Brazil, Chile, Colombia, Czech Republic, Greece, Hong Kong, Hungary, Israel, Malaysia, Mexico, Puerto Rico, Poland, Romania, and Taiwan. Microsoft also expects to have commercial availability in India later this year.

Among the new customers are McDonalds, Aon, Lions Gate Entertainment, and Rexel Group. They join existing customers, such as Blockbuster, Coca-Cola and Autodesk as those paying Microsoft to run hosted versions of its products. Microsoft formally launched Microsoft Online at a San Francisco event a year ago.

Next week, Microsoft will also formally launch Exchange 2010 at its TechEd Berlin developer event. Microsoft said last month that it had finalized the product. Traditionally, Microsoft has developed products first as a server and only later, if at all, customized them to run in hosted form.

Exchange 2010, though, was designed first as an online service and then crafted into a product that businesses can run on their own servers.

Microsoft said Thursday that it has finalized the code for Exchange 2010, the next version of its e-mail and communications server.

Exchange 2010, which has been ahead of the rest of the Office family in development, becomes the first of the Office 2010 wave of products to be finished.

"Our senior leadership team has signed off on the final code, and it has been sent to our early adopters for one final look before its public release.," Microsoft said in a blog posting.

The product will become broadly available in November, Microsoft, said with a launch planned for the TechEd Europe conference, which runs Nov. 9-13 in Berlin. Other parts of Office 2010, such as the new versions of Excel, Word, PowerPoint and Outlook, are not due until next year, with a beta slated for later in 2009.

Among the features in the next Exchange is an ability to ignore a particular e-mail conversation, as well as "MailTips," which offers warnings when one might be about to commit an e-mail faux pas.

Microsoft developed Exchange 2010 as a service first, using it to power its Live@edu mail service and then worked to create the server version of the software--a reversal of the past way Exchange and other products have been created.

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.

"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."

The next version of Microsoft's corporate e-mail server will not only offer the ability to view e-mail by conversations, but also the option of "muting" any thread that a user would rather not take part in.

Conversation threading, a popular feature from Google's Gmail, and the mute option are several of the new features in Exchange 2010, the next version of the company's e-mail and calendar server. The software is entering public beta on Wednesday, with a final launch slated for the second half of this year.

Among the other features of the product, which has been code-named Exchange 14, is something Microsoft has dubbed "MailTips," which offers warnings when one might be about to commit an e-mail faux pas.

"MailTips is kind of like a guardian angel before you send the mail," Microsoft's Rajesh Jha said in an interview this week. For example, it will warn a user if they are about to send an e-mail to a large distribution list or if they are going to send an attachment outside their company's firewall.

Microsoft is also building in new archiving features into Exchange 2010, features that will allow companies to store a user's e-mail archive as well as make archived messages available to users when they are not at their desktop or laptop PC.

Many of Exchange 14's features work in the Web-based Outlook Web Access program, but to use them on the desktop will require Office 2010, which isn't due out until the first half of next year, Microsoft said.

"Exchange is leading the way," Jha said.

Microsoft is already using Exchange 2010 to power its Live@edu service for schools and universities. Customers of Exchange Online, Microsoft's hosted service for businesses, will have the option of moving to the new Exchange after the server software is released, Jha said.

For a bit more on Exchange 2010, here's a video I shot with Jha during an interview at his office earlier this year.