July 14, 2008 – (HOSTSEARCH.COM) – The fact that Microsoft is to sell hosted versions of its Exchange and SharePoint solutions has been common knowledge for some time. Although originally suggesting it would only sell hosted services to larger customers, the company announced earlier this year that it would actually sell to businesses of any size. Microsoft’s July 8, 2008 WPC conference announcement that they would initiate such services was not then entirely a surprise. That services would be available at a cost of only $3 a month per user has though sent ripples through the web hosting community.
Microsoft introduced two online products at its conference. Its “Business Productivity Online Suite” is “a family of services” that delivers “rich collaboration and communications capabilities”. It includes Microsoft Exchange Online, Microsoft Exchange Hosted Services, Microsoft Office SharePoint Online, Microsoft Office Live Meeting and Microsoft Office Communications Online, all available for a cost of $15 a month per user. However, the company is also introducing what it is calling a “Deskless Worker Suite", a combination of Exchange Online and SharePoint Online which will be made available for the extremely low price of $3 a month per user.
This something of a blow to web hosts who make their living based on offering hosted Exchange and SharePoint. Microsoft is suggesting such companies resell its online offerings, earning 12% commission for the first year, and 6% for subsequent years. By its nature though, this deal would essentially require hosts to hand over their hard earned customer base to Microsoft, something few are likely to do happily.
The situation though may not be as bleak as it first appears. Microsoft’s hosted services are being called ‘entry-point’ services, offering a more limited set of functionalities than the services offered by web hosts. That means they are highly unlikely to be of interest to corporate customers who require all the bells and whistles a technology has to offer. As a result, some are saying that what Microsoft is doing will be good for web host purveyors of Exchange and Sharepont – Microsoft will spend millions of dollars highlighting its online solutions to an emerging market that is becoming more at ease with the concept of Cloud computing, and a gulf will emerge – Microsoft catering to the lower end of this market (essentially those who might use Google Apps) and its hosting partners catering to major corporate players. This is a logical, but possibly a naïve scenario.
The market for these online services is yet to fully mature. As the technologies themselves are only fully emerging as solutions, the market is not entirely au fait with its own requirements. The prospect of steering Microsoft Outlook capabilities off the PC and into the Cloud, where information is always available, will prove very enticing. Regardless of the nature of the solutions available, who best to purchase such a Microsoft solution from? Microsoft, or a host you will have to research to determine its reliability?
Microsoft’s move underscores the current fragility of the web hosting industry. At any given time any web host’s offerings are essentially the latest versions of technologies provided by a handful of key players (Microsoft, Parallels, etc.). So few hosting companies are involved in developing alternatives, that the entire industry is potentially poised for a slow, gradual, but ultimately complete takeover. This is then surely a pivotal time for web hosts – invest now in research and development or the whole industry as we know it may not survive, and will merely become another icon on major player’s website.
