Microsoft Exchange 2003 Released To Manufacturing

Three years in the making, the enhanced e-mail client and server was released to manufacturing Monday and is expected to be available to licensed enterprise customers by the end of the summer, one Microsoft spokesman said.

Microsoft also plans to formally announce this week a per-user licensing option for Exchange 2003 similar to the one introduced for Windows Server 2003, said Missy Stern, a product manager for Exchange at Microsoft.

While Microsoft originally expected to ship the e-mail server midyear, channel partners applauded what turned out to be only a short delay. The last Exchange upgrade shipped in October 2000.

"The earlier the better," said Michael Goldstein, vice president of sales and marketing at LAN Associates, Ft. Lauderdale, which has many Exchange 5.5 customers looking to migrate to the new e-mail server. "The earlier release will speed up some of deployments."

While enterprise customers will get their hands on the CDs in late summer, general availability is expected by the end of the year, a Microsoft spokesman said.

The new release of Exchange is one of the key components of Microsoft's Office System 2003 product wave this fall, which also includes Office 2003 and SharePoint Portal Server 2003.

As first reported by CRN last week, Microsoft will try to spur upgrades by offering customers a more flexible per-user or per-device licensing model, which would give customers added flexibility for serving road warriors and information workers who need a single license for accessing Exchange from all wired and wireless computers, as well as for many deskless and factory workers who need to access Outlook from the same terminal.

The software giant also plans to extend to customers a universal license for the connector to enable an unlimited number of business partners and external users to access the Exchange store.

While IT spending remains tight, Microsoft's solution providers said they expect a nice bump in their services businesses with the release of Exchange 2003, formerly code-named Titanium. They expect a significant migration swing since roughly 50 percent of Microsoft's e-mail installed base run Exchange 5.5, which is now about six years old.

Industry observers said there are other factors that should drive solution providers' upgrade business, including the end of mainstream technical support for Exchange 5.5 on Dec. 31, 2003, and increasing requirements for Active Directory on Microsoft's newer fleet of products.

One analyst also pointed out that many customers have already paid for their Exchange 2003 upgrades through Licensing 6.0 and Microsoft's Software Assurance maintenance provisions.

"A high percentage of customers went on Software Assurance last summer, and that gives them free access to Exchange 2003," said Mark Levitt, a research vice president for collaborative computing at IDC. "So it's not a question of cost but time to configure and deploy."

For most, Exchange 2003 is not considered a major upgrade from Exchange 2000.

However, Exchange 2003 offers Exchange 2000 customers major improvements for server consolidation, Outlook Web Access usability, mobile and wireless support and new antispam features.

In addition, the vastly improved performance and stability of Exchange 2003 makes it an ideal server consolidation solution for both version 2000 and version 5.5 customers, added Levitt, who predicts a big migration to Exchanage 2003.

"It's been three years since the last version, and Microsoft has struggled to get customers off 5.5. They see this as another shot at the apple of getting customers to upgrade," he said. "Many customers said no thank you to Exchange 2000 because Exchange 5.5 was stable and [Exchange 2000 had the extra requirement] to deploy Active Directory. But now, Exchange 5.5 is showing its age."

Solution providers say many of their customers are currently in the planning stages and are ready to go when Exchange 2003 is released.

"A large spectrum of customers in terms of size, all with differing reasons, are seeing large potential value in Exchange 2003," said Michael Cocanower, president of ITSynergy, a solution provider in Phoenix that's currently working with small, midsize and large customers on their Exchange 2003 migration plans. "I have a medium customer with about 80 desktops that cannot wait for Exchange 2003 because of Outlook Web Access improvements and Server ActiveSync for their remote workforce. I have a large customer with approximately 1000 PCs that is considering the upgrade from 5.5 directly to 2003."

One service provider who deploys Microsoft's hosted High Volume Messaging solution--an alternative to running Exchange 2003 in-house--said he also expects a good percentage of customers to move to Exchange during 2004.

"Microsoft is also discontinuing [mainstream] support for Exchange 5.5 by the end of the year, and that will be another major factor in spurring upgrades," said Patrick Fetterman, vice president of marketing and strategic development at service provider Mi8, New York. "The majority of companies we talk with have not upgraded to Exchange 2000 and Active Directory [AD] yet, so falling behind one more generation may spur them to do something sooner rather than later. In the end, it seems primarily a tactic to finally get companies on AD, which then opens them up to a lot more products from Microsoft."

According to Ferris Research, Microsoft leads the e-mail market in terms of head count, with nearly 338 million seats, while Lotus trails in second place with about 283 million Notes users.

However, Lotus remained on top in terms of revenue for 2002, according to IDC.

According to the research firm's recently released numbers for 2002, for example, Lotus continued its leads in revenue, claiming roughly 46.2 percent of all revenue for the integrated collaborative environment (ICE) market in 2002. However, its overall share dropped from a high of 48.4 percent in 2001, while Microsoft's share of e-mail revenue in 2002 inched up to 44.3 percent, to $725 million, from roughtly 38 percent in 2001.