Microsoft's new hosted services: What are your options?

Today's announcement officially means Microsoft is the latest entry in a market of services that Microsoft actually made feasible: It can now host Exchange mailboxes for Active Directory users that do not have Exchange Server 2007.

As those who already enjoy its benefits are currently aware, an Exchange server does quite a bit more than just host e-mail. Perhaps even more importantly, it can synchronize the schedule of everyone who works together in a widely dispersed business. With Outlook 2007, that means having access to personal schedules as well as group schedules that are updated in the background. Ongoing tasks and company-wide contacts and phonebooks are also maintained and synchronized across devices. In more sophisticated environments, Exchange also facilitates the use and maintenance of voice mail.

Whether today's announcement of Microsoft-branded hosted services actually adds up to a savings for a business customer, depends on how that customer is getting or has gotten its software. Right now, the Exchange Online service can host mailboxes for as little as $10 per month per client, with a five-user minimum. That's about the industry average; other firms presently offer Exchange hosting for between $8 and $15 per month.

But Microsoft's not entering this market to simply lend its voice to the ongoing chorus. On an a la carte basis, it's also offering SharePoint Online hosting for managing a collaborative document sharing site (at $7.25 / user / month), secure instant messaging and presence with Office Communications Online (at $2.50 / user / month), and Web conferencing with Office Live Meeting, a pre-existing service (now at $4.50 / user / month).

In a very compelling alternative package, though, the company is rolling all four of these services into a single bundle called Business Productivity Online Standard Suite, for $15 per user per month. Package licensing deals are available for "midmarket" customers with between 25 and 499 users, and "enterprise" customers with 500 users and above.

Compare this against the way licensing works now. Microsoft offers Exchange Server 2007 Standard Edition for $699 up front, plus $67 for each Client Access License (CAL). So in small-quantity bundles, just the CAL could be paid for in under seven months' time, which would leave a seven-person business another seven months to break even on the up-front costs.

However, just last week, Microsoft rolled out four buildouts of Small Business Server 2008 and Essential Business Server 2008, which include Exchange Server. For the Standard Edition of SBS 2008 (which does not include SQL Server), a five-CAL package sells for $1,089, plus $77 for each additional user. SBS also includes Windows Server 2008, of course, as well as SharePoint Services 3.0, and additional extras such as Forefront Security.

Technically, Microsoft's Online hosted services do not require Windows Server. However, if your business uses networked systems and if you want to take full advantage of Exchange synchronization, you should probably have a domain controller, which means one copy of Windows Server 2008 Standard Edition. That will get you Active Directory Directory Services (AD DS, and yes, the "D" is indeed repeated there). You could get hosted e-mail without Windows Server, in which case you'd be running Outlook 2007 through Windows XP or Vista, but most of the ActiveSync functionality that Exchange provides would be useless. The street price for Windows Server 2008 Standard is about $749, coming down a bit since the rollout of SBS and EBS 2008, and you may still need additional CALs.

Perhaps intentionally, Microsoft computed these pricing schemes so that no single product choice would offer a clear-cut advantage over the other in all cases. However, if you have the up-front investment and are willing to stick with Windows for the long haul (meaning, for a few years or more), it's conceivable that you could still save money by going the traditional route rather than the month-to-month option Microsoft now offers.