Live! Online! It's . . . Microsoft?

Last Sunday, Microsoft made some mighty interesting announcements that help clarify its software and services strategies. Of course, Software as a Service (SaaS) is a rapidly growing field, and Microsoft already has its foot in the door of the SaaS game thanks to its Microsoft Exchange Hosted Services line, which I've written about before ("FrontBridge Gets a Makeover," April 1, 2006). Windows Live Mail and Windows Live Messenger also both qualify as SaaS. However, until now Microsoft hasn't offered enterprise-quality hosted communications services.

The announcements come from Microsoft's Business Division, which includes both the Office line (and thus the SharePoint family) and the Unified Communications Group, home of Exchange Server and Office Communications Server (OCS). To make sense of what Microsoft announced, you need to think "market segmentation." Just as Apple has two separate lines of laptops, and just as Honda has its separate, more upscale Acura brand, Microsoft's new SaaS offerings come in two flavors. "Live" services are targeted at individual users (whether they're corporate types, students, or self-employed) and virtual teams. The "Online" brand is used for enterprise-grade services and is initially aimed at organizations with 5,000 seats or more. I'm not going to talk about the "Live" announcements in this UPDATE because they're not targeted at us (although Office Live Workspace is pretty cool). Instead, let's take a look at the "Online" announcements and what they mean.

First up is Microsoft Exchange Online. As its name implies, it's Microsoft's foray into the hosted Exchange market, which has long been the domain of hosting providers such as Blue Ridge Internetworks, Mi8, and AppRiver. Interestingly, Exchange Online is targeted specifically at enterprises. I'm not sure how many companies out there have at least 5,000 seats and want to outsource their messaging operations to a hosted service provider. Obviously Microsoft sees a market opportunity, though, and I expect the company to put the full might of its marketing organization behind its efforts. However, pricing and availability haven't been announced yet. In the SaaS world, that's usually a good sign because it means pricing is highly negotiable. The first companies to sign up for this will probably be able to negotiate good deals so that Microsoft can build a customer base.

Exchange Online is accompanied by two additional services: SharePoint Online and Office Communications Online. As their names imply, these are Microsoft-hosted services centered around SharePoint and OCS. Because Microsoft isn't saying what features will be supported, it's hard to say how compelling these offerings will be, especially given that Windows SharePoint Services is so easy to deploy and use. However, I'll be interested to see how Office Communications Online stacks up against self-hosted OCS deployments. In particular, it's interesting to note the circular nature of conferencing options: You can use Live Meeting (a hosted service), OCS (self-hosted), or Office Communications Online (another hosted service that's neither fish nor fowl).

The biggest announcement got the least attention in the press release: the introduction of Microsoft Exchange Labs. Although the announcement was sparse on details, this is clearly Microsoft's attempt to horn in on Google and its long-established strategy of offering beta applications to customers. I expect Exchange Labs to be a development hothouse where Microsoft can deploy experimental technologies and gather real-world feedback, letting them move successful experiments into the main Exchange code base. It's tantalizing to consider the kinds of changes the Exchange Labs effort might bring us—if you have things you'd like to see Microsoft experiment with, drop me a note at [email protected].

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