Microsoft targets Google, Yahoo with Web-hosted SMB wares

SaaS versions of Exchange and SharePoint available for trial

Microsoft Corp. announced Monday the trial availability of Web-hosted versions of its popular Exchange and SharePoint collaboration software. The move appears to be a strong declaration of Microsoft's intent to blunt Google Inc.'s rise in the software-as-a-service (SaaS) market.

In a keynote speech kicking off Microsoft's SharePoint Conference in Seattle, Chairman Bill Gates will announce the expanded online offerings, which U.S.-based companies can sign up to beta-test.

Gates is also expected to announce that more than 100 million SharePoint licenses have been sold, generating a total of $1 billion for Microsoft.

Online versions of Exchange and SharePoint will be generally available to companies of all sizes in the second half of the year, according to John Betz, a director in Microsoft's online services group. No prices were disclosed, though Betz said companies that already have Exchange or SharePoint running on their premises will get some credit towards the cost of subscribing to the online service version.

"If you've already invested in the software, the price you'll pay will be less than if you own nothing today," Betz said.

Microsoft will aim for companies with about 50 to 250 PCs, or 100 to 500 users. And the services will be targeted to appeal to business IT staffers, rather than to try to go around them, as Google has said it is trying to do with its fast-rising Google Apps offering.

"Companies tell us pretty consistently that they want enterprise-grade solutions to meet the challenges they face, and that they are concerned about consumer 'hand-me-downs' forming the basis of their business solutions," Betz said.

Though Microsoft is taking another step toward competing with its own partner ecosystem, members of that community insisted that its entry into the market will help, not hurt them.

"I truly believe that the rising tide will lift all boats," wrote Ravi Agarwal, CEO of GroupSpark, a provider of hosted applications including Exchange, SharePoint and others, in an e-mail. "Microsoft will bring greater awareness to the market, and when prospective customers look at the Microsoft hosted offering more closely and realize that critical features like BlackBerry Enterprise Server are missing -- they will flock to us."

"I think this will accelerate adoption on Microsoft's, rather than Google's, platform," said Keith McCall, chief technology officer of Azaleos Corp., a maker of managed Exchange server appliances. "That's good for us, since we think any company with more than 250 employees will still want to keep Exchange and other key apps on-premise."

Besides Exchange and SharePoint, Microsoft also plans to offer online versions of its Office Communications Server (OCS) unified communications software and its LiveMeeting web conferencing software, confirmed Betz.

Microsoft has been readying these online offerings for nearly three years. But until today, Microsoft had maintained that its "managed services," when launched, would only be offered to businesses buying more than 5,000 seats or more.

Rather, Microsoft had insisted it would rely on its ecosystem of partners, which since 2002 have been allowed to host and sell online versions of Exchange and SharePoint.

But with the rapid rise in interest in Google Apps and Yahoo Inc.'s Zimbra, Microsoft decided to take matters into its own hands.

"It appears that this entire initiative ... is driven largely in response to competitive threats from Google's Gmail and Yahoo's Zimbra," Agarwal wrote.

Microsoft's services, which are scheduled to be commercially available in the second half of this year, will back up its claim of 99.9% availability with financial guarantees, Betz said. Services and data will be redundantly hosted at Microsoft's 13 data centers.

Betz insisted that Microsoft's move into small and midsize business Web hosting isn't a betrayal to longtime partners. Partners will still be able to offer their own hosted versions of Exchange, SharePoint and others.

And similar to its upcoming hosted Dynamics CRM software, Microsoft will force companies interested in buying the Microsoft-hosted Exchange and SharePoint to go through its channel partners.

"Partners who make the sale for us will make money," he said. "We are not cutting them out; we are expanding the opportunity."

Betz said that hosting firms can also spruce up their offerings by adding integration to non-Microsoft software such as Cisco Systems Inc.'s voice-over-IP software, or with server software to support BlackBerry devices, to differentiate themselves from Microsoft's online software, which will integrate only with other Microsoft software.

Meanwhile, Agarwal said that hosting firms should also be able to provide better support and uptime than Microsoft.

"This won't be a robust offering for at least three to four years, as is true with any new Microsoft offering," Agarwal said.

More than 3,000 attendees are expected at the SharePoint conference, which will run through Thursday.

Microsoft also announced the availability of the free Microsoft Search Server 2008 Express software, which complements SharePoint. It also plans to release Silverlight Blueprint for SharePoint, a tool kit aimed at helping developers create rich Web applications for corporate intranets that take advantage of the Silverlight runtime's multimedia capabilities. The Blueprint can be downloaded from Microsoft's site.

Copyright © 2008 IDG Communications, Inc.

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