Microsoft released the latest version of its Exchange e-mail server Monday with claims that Exchange 2010 could cost as much as 70% less than previous versions in terms of total cost of ownership.
The move comes just a week after Microsoft slashed the price of its online productivity suite, which includes a cloud-based version of Exchange, from $15 per user to $10 per user.
Cost has become a big topic in the e-mail world, as last month IBM announced it was releasing its own e-mail service, Lotus iNotes, for $3 per user, and as Google recently won a highly-publicized bid to become the city of Los Angeles' e-mail provider at one third the price of Microsoft's bid.
Though Exchange remains by far the dominant corporate e-mail platform, Google continues to get notice while competitors continue to ply their hands at the corporate market. In addition to IBM's announcement of a SaaS version of Notes, Cisco announced Monday that it would be entering the corporate e-mail market by integrating e-mail capabilities into its WebEx collaboration suite.
In an interview, however, Microsoft business division president Stephen Elop didn't sound worried. He said that the largest pool of new customers for Exchange Online continues to come from Notes, that people "quickly see through the marketing and PR hype" of Google, and that he challenged "the premise that [Cisco] has integrated real corporate e-mail."
Microsoft isn’t cutting the price of its on-premises server, which lists at $699 for the standard edition and $3,999 for the enterprise edition, and $67 and $35 per client access license, respectively. Instead, Elop said, most of the savings will come from a combination of new features in Exchange 2010 and the slow migration to e-mail as a service.
Forrester Consulting released a study Monday, commissioned by Microsoft, indicating a payback period of just six months for Exchange 2010.
In terms of new features in Exchange 2010, Elop attributed the cost savings to a "simplified high-availability model and support for lower-cost storage" as well as native archiving and new features that allow customers to replace their voicemail infrastructure with Exchange.
In terms of storage, under-the-hood changes mean that Exchange 2010 optimizes storage IO, using as much as 90% less disk IO than Exchange 2003 and 70% less than Exchange 2007, which significantly lowers the minimum disk performance requirement and opens up new, cheaper storage options like desktop-class direct attached storage. Other features make Exchange more resilient to storage problems.
“We have increased storage eightfold at 25% of the cost with Exchange Server 2010 and our employees are seeing a reduction of unwanted e-mail by more than 70%, freeing us up to focus on more important client issues,” Steve Derbyshire, operations director at NEC Philips, said in a statement. In addition to NEC Philips, other early Exchange 2010 customers include Bank of America, Global Crossing, Lifetime Products and Subaru Canada.
Other new features in Exchange 2010 include a feature called Mail Tips that informs users when they might be about to commit an e-mail faux pas like sending an e-mail to the entire company or sending proprietary information to a third party, the ability to ignore an e-mail thread, and the ability to clean up a thread to appear in "conversation view" rather than as a series of individual e-mails.
Last week, Microsoft cut the price of its Business Productivity Online Suite, which includes software-as-a-service versions of Exchange, SharePoint, and Office Communications Server, from $15 to $10 per user. Elop said this price cut came about because an influx of new customers had enabled new economies of scale, not because of competitive pressures.
Microsoft expects half of all Exchange mailboxes will be online within five years, Elop said. However, Microsoft also expects many customers will continue to have a mixed environment. For example, McDonalds is using Exchange at its central office and Exchange Online for other locations.
Microsoft on Monday also released Forefront Protection 2010 for Exchange Server, which detects and blocks malware and spam.
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