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Whatever Happened to Hosted Messaging Services?

Ever since Microsoft Exchange Server 5.5 began supporting Internet protocols in earnest, many ISPs and application service providers (ASPs) have been trying to build a business around hosted messaging services that use Exchange as the primary platform. Companies such as FutureLink, USinternetworking (USi), United Messaging, and Zivex Technology Solutions have bet a significant part of their future success on hopes that other companies would begin to turn over their messaging infrastructures. Unfortunately, not all these dreams have come true. In fact, some hosted-messaging-service contenders are no longer in business—and many of them blame Microsoft for their troubles.

Scalability, disaster recovery, and availability have come up short for Exchange 2000 in ISP and ASP environments. The problems and shortcomings of Exchange 2000 clustering are an example. Microsoft improved Exchange's "abilities" (as the software company calls them) in Exchange 2000 but not to the extent that many ISP and ASP environments needed. Also, to be competitive in the hosted-messaging-service market, ISPs and ASPs require several features that Microsoft hasn't added or has been slow to add to Exchange.

The Microsoft Automated Provisioning Services (MAPS) environment, which evolved from the Microsoft Commercial Internet System (MCIS) product, is one example of such a feature. Most ISPs and ASPs say that MAPS is absolutely necessary to their success. (MAPS provides the provisioning function required for commercial operation of an ISP or ASP environment.) Microsoft was supposed to deliver MAPS soon after the Exchange 2000 release to manufacturing (RTM) but didn't. Then Microsoft promised to deliver MAPS with the next Exchange release (code-named Mercury), which originally was due this month. However, Mercury never made it to fruition; instead, it became a series of service packs that we now know as Exchange 2000 Service Pack 2 (SP2), SP3, and SP4. MAPS is ready for release now, but it might be too late, according to many ISP and ASP customers.

Another example is Active Directory (AD). Most ISPs and ASPs didn't realize how complicated a multiple-tenant AD/Exchange 2000 deployment could become. Many have given up and are simply deploying isolated AD infrastructures for each customer. This approach is not the utopia that hosted-messaging-service companies had dreamed about.

However, despite some technical problems with Exchange and AD, I wonder whether you can blame ISPs' and ASPs' lack of success with hosted Exchange services on these problems alone.

You certainly can't ignore business factors, such as the demise of the dot-coms. Many hosted-messaging companies were caught in the tide as these "new-economy" companies went down the tubes. Also, as the economy turned downward, many organizations that might have considered outsourcing their messaging systems pulled back into defend-and-protect mode. Another problem is the ISP/ASP business model. These companies operate in an extremely competitive environment and at extremely low margins—one bad month and the game is over. In my opinion, these economic factors have hurt the success of the hosted-messaging business more than Exchange's shortcomings have done.

Many hosted-messaging-service businesses would like to blame Microsoft and Exchange's limitations for their lack of success; however, many companies are operating successful hosted-messaging businesses despite these limitations. If your organization offers hosted-messaging services with Exchange, drop me a note with your opinion. If you're an organization that has considered outsourcing your messaging system to one of these companies, let me know your thoughts also.

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