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Microsoft Exchange Server -- E-mail and calendaring server integrated with Windows 2000 Active Directory

By ServerWatch Staff (Send Email)
Posted Jun 5, 2002


Exchange Server 2000 is, at its base level, an e-mail server targeted at the messaging needs of both large and small corporations. The initial release of Exchange was a solid first step into the corporate messaging environment for Microsoft, but the offering fell short in several strategic architectural needs, including its information store, or database. Exchange 4.0 had an unexpected storage limitation of 16 GB, which caught many systems integrators and administrators off guard. Another shortcoming of the product was the lack of Internet access tools, such as Network News Transfer Protocol (NNTP) for newsgroups, and no support for POP3.

Microsoft added Internet functionality in its Exchange 5.0 release, which shipped in March 1997. Exchange 5.0 offered a suite of new Internet enhancements including POP3 and NNTP functionality, in addition to allowing unlimited storage. Exchange Server 5.5 was released in November 1997 to meet the demand for advanced messaging beyond the need for point-to-point e-mail. Exchange 5.5 offered an enhanced set of Internet tools, such as NNTP, Lightweight Directory Access Protocol (LDAP), and Outlook Web Access Client (OWA). Unfortunately, the product was still bug-ridden, and enterprises found issues ranging from the central Exchange database, known as the Information Store, freezing for unknown reasons to TCP/IP memory leaks. Microsoft is now releasing Service Pack 3 for Exchange 5.5 to address a host of calendaring, storage, and interoperability issues.

There is no denying that e-mail has become the de facto standard for communication all over the globe. In many enterprises, e-mail is the standard and official means of communication, taking precedence over the phone or even personal meetings.

Exchange's two largest competitors are Lotus' Lotus Notes and Novell's GroupWise. Sendmail, another competitor with a narrower focus, currently provides a higher level of POP3/SMTP-based security than Notes, Exchange or GroupWise. The messaging market is growing rapidly in response to increased consumer demand for "unified messaging, " which, at its base level, is a single point of access to all electronic forms of communication, including e-mail, fax, voice mail, e-forms and database access.

Product Strategy and Trajectory
Microsoft is using a three-pronged market strategy for Exchange 2000.
  • First, Microsoft is attempting to establish Exchange Server 2000 as the premier turn key messaging solution for both corporate and Internet use with its new "Web Store." Web Store combines the Windows 2000 File System and Web Data into a single infrastructure, making all objects within the Active Directory URL accessible.


  • Second, Microsoft has enhanced its Web-based functionality to target the Internet service provider (ISP) marketplace. We believe Exchange 2000's new clustering and enhanced Web capabilities, combined with low cost, will be an incentive for ISPs to migrate to Exchange beginning in the first quarter of 2000.


  • Third, Microsoft is marketing Exchange Server 2000 under the "lower total cost of ownership " banner by offering the lowest cost per server and client seat on the market. Each Exchange Enterprise Server license costs approximately $999, and each client access license costs approximately $29. The same Novell GroupWise licensing, based on a 25-seat implementation, is priced at more than $3,480, slightly more than $99 per client seat. Lotus Notes Release 5 Mail Server licensing, also based on a 25-seat implementation, is priced at more than $2,133, about $45 per client seat. Outlook, Microsoft's front-end messaging client, is bundled with Microsoft Office. By bundling client software, Microsoft is further driving down the costs associated with implementing or upgrading a new messaging system.

Pricing Comparison of Leading Messaging Products
Product Server License Cost
(Based on 25 Users)
Microsoft Exchange 2000 $1,724
Lotus Notes Domino R5 $2,133
Novell GroupWise 5.5 $3,480

During the first three quarters of 1998, Exchange Server outsold Lotus Notes Domino by greater than 700,000 client seats (Source: EMMS Electronic Mail and Messaging Systems), and it continues to take a greater share of corporate client sales. This is due in part to the necessity to upgrade non-Y2K-compliant mail systems such as cc:Mail and MS Mail. The Radicati Group surveyed Fortune 1000 companies to determine which messaging systems are currently in use. It found that Microsoft Exchange currently has a 44% market share among Fortune 1000 companies, compared to a 29% market share by its closest competitor, Lotus Notes. Among Fortune 500 companies, 52% are standardized on Microsoft Exchange vs. 24% standardized on Lotus Notes.

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