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Exchange 2000’s strongest appeal to the IT marketplace will be through integration with Microsoft’s Active Directory (ADS), found in upcoming releases of Windows 2000 (previously named NT 5.0). Lotus Notes’ messaging systems do not currently have ADS capabilities, and Novell’s GroupWise 5.5 offering lacks robust NDS integration and offers no support for ADS. The most immediate benefit of ADS is simplified administration. From a single point on the network, an administrator can easily control the entire Windows 2000 and messaging implementation. For example, groups within the Windows ADS can be automatically used within Exchange Server as a distribution list. End users will require no retraining because the front-end interface connection to Exchange will not change. All objects contained within the new Windows 2000 ADS will fall into one of two primary mail categories:

  • Mail-Enabled Objects:These are objects within the ADS that have
    at least one e-mail address associated with it. Once enabled,
    the object can participate in routing.

  • Mailbox-Enabled Objects: These are objects associated with a mailbox (or inbox) and at least one e-mail address. For
    example, a public folder, or network share, can have an e-mail address
    such as “” Anything mailed or routed to this
    address will be placed into the specified object

With Windows 2000, Microsoft has included an Active Directory Connector to allow synchronization between the Exchange 5.5 directory and the Exchange 2000 Active Directory. The connector allows for coexistence during either an upgrade or migration, and it will ship as part of the Windows 2000 server at no additional charge. The synchronization between the two directories will be essential for companies looking to upgrade to Windows 2000/Exchange 2000. According to Jeff Andersen of JD Edwards, a current beta tester, the Active Directory Connector is stable in a single-site environment, but ut has tested it over WANs. Mr. Andersen added that the only potential downside to the Active Directory Connector is the time it takes to populate a new directory.

Exchange 2000 also provides multiple database configurations, which enables administrators to split a single logical database across multiple physical drives, thus improving performance, enhancing stability and enabling faster backups and restores. In the event that a single database fails, the server will continue to run. This allows the system administrator to “hot swap and/or restore” the physical drives without interrupting service. Mr. Andersen stated that the multiple database configurations are “a step in the right direction.” He further added, “recovery is still poor from a database perspective, and deleted item retention for 30 days is not enough.” Microsoft never completed fixes for the Exchange 5.5 database structure, even with the current release of Exchange Service Pack 3. This leads us to believe that users can expect to find similar bugs within the new architecture (probability 70%). However, neither GroupWise nor Lotus Notes can boast a database architecture as flexible as the Exchange 2000 structure. JD Edwards takes advantage of the granularity of the new Exchange databases architecture by dedicating databases to key executives, reducing downtime and adding “easy recoverability.”

Microsoft is introducing another new feature, Distributed Configuration Architecture (DCA), into Exchange 2000. DCA will allow systems engineers and administrators to split Exchange Server’s services (protocols, directories, storage and Web Store) across different servers, providing higher scalability. This DCA functionality, combined with Exchange Server 2000’s capability to provide multiple database configurations, will give Exchange Server 2000 the ability to host millions of users. This newfound scalability will appeal to large-scale enterprises and ISPs, and we expect Microsoft services, such as MSN and HotMail, will migrate to Exchange 2000 by the fourth quarter of 2000 (probability 70%).

Product Challenges

Microsoft has released only Beta 3 of Exchange 2000 Server. The product, scheduled to be released to manufacturing during the second quarter of 2000, will require a mass effort by the development team to repair minor bugs within the source code. Mr. Andersen stated that JD Edwards has been beta testing Exchange 2000 since Beta 2, and noted that Microsoft has responded well to bug issues and has made many enhancements to Beta 3. “On the whole, the functionality of the product works as advertised.” In the past, Microsoft has missed shipment dates during the initial releases of new products and service packs. To hit the targeted shipment date, bugs must be repaired in database architecture, the Web Store, clustering and distributed configuration.

Microsoft will need to provide incentives to the majority of its corporate client base for upgrades to occur. As always, Microsoft is offering competitive upgrade pricing. But it will have to do more, such as offering discounted or free initial training to systems administrators, while ramping up its technical support staff in a limited time frame. The Microsoft Exchange Conference, held in Atlanta, sparked a great deal of excitement in both the Microsoft faithful and those IT executives who look to be on the “bleeding edge” of technology. However, stability and reliability must be certain before the corporate world will take action on this new back-office suite.

Microsoft is attempting to gain a share of the ISP e-mail platform with Exchange 2000, and it will need to provide extremely competitive pricing due to the vast volume of Internet users. Microsoft’s corporate pricing structure for Exchange offers the lowest entry point into the messaging market. However, the pricing will need to improve at the ISP level to dismantle the primarily Unix/Linux base. One advantage Exchange will offer out of the box to ISPs is a video conferencing component. Presently, ISPs must use a third-party product that requires a second client piece, such as Microsoft’s NetMeeting or White Pine Software’s See You—See Me software. Users accessing
an ISP utilizing Microsoft Outlook 2000 coupled with an Exchange back end will benefit from the enhanced video- and audio-streaming capabilities built into Exchange 2000. We believe that the chance of Exchange immediately debunking the existing Unix Internet platforms used by ISPs is slim (probability 20%). To make an impact, Microsoft will have to not only aggressively price Exchange for ISPs, but also create an ISP-tailored edition of Exchange Server that offers strictly Internet utilities (by the fourth quarter of 2000, probability 60%).

Bottom Line

Vendor Recommendations

Microsoft will have to ensure enough development resources to release the product in a timely fashion.

Microsoft will have to aggressively market to the ISP field and create a tailored version of Exchange Server to fulfill both financial and functional ISP requirements for the product to succeed outside of the corporate world.

Training efforts will have to be increased to “ramp-up” the systems administrators responsible for deploying and administering an enterprise messaging system. The Microsoft Exchange Conference was a good first step, but much more is needed to prepare the marketplace.

User Recommendations

Exchange 2000 contains powerful enhancements that customers should spend time testing and evaluating. Given the high demand for a flexible database structure coupled with increased stability and reduced downtime, Exchange 2000 will be an extremely viable candidate for either a migration or upgrade initiative. New Exchange Server customers, potentially ISPs, will benefit from the enhanced Internet features and scalability of the product. Neither Windows 2000 nor Exchange 2000 have been officially released, and they are not expected to ship until the second quarter of 2000 (probability 80%). Enterprises should be cautious on the path to upgrade. Microsoft’s initial releases tend to contain flaws within the code (often referred to as “bugs”). Therefore, it would be best to wait for the product to be fully “production tested” before jumping on the bandwagon. For small to midsize companies (i.e, those with

Exchange 2000 New Component Features

Feature Function
Web Store Combines ADS file system and Web data into a single infrastructure; all objects within the directory are URL-accessible
Active Directory Integration Eases Exchange administration by allowing single-point control over all network resources
Multiple Database Configuration Enables splitting a single logical database across multiple physical drives, thus improving performance and stability, and enabling faster backups and restores
Distributed Configuration Architecture Splits Exchange services across multiple servers to achieve load balancings


Headquarters: Redmond, Washington

FY98 Revenues/Growth: $19.75 billion/29%

FY98 Earnings/Growth: $7.76 billion/74%

FY98 Services vs. Product %: S=25%, P=75%

Employees: Approximately 50,000

Information: Phone +1 42 882 8080

Product Name: Microsoft Exchange 2000 Server (Code-Named “Platinum”)

Product Scope: Enterprise Messaging Server

Industry Focus: Manufacturing, Utilities, Healthcare, Finance, Retail and Higher Education; Market Share: 38%; Installed Base: 50,000,000 Corporate Licenses

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