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Exchange to retain dominance, study finds

Microsoft Exchange's installed base will grow in the next four years, according to new research by the Radicati Group. But users of the messaging software have some important decisions to make in the near term.

With free support for Microsoft Exchange 5.5 ending this year, and extended paid support expiring at the end of 2005, several messaging-software vendors will be in the hunt for migrating Microsoft customers. But Redmond is likely to fend off the competition with the newest version of its messaging platform, according to new research.

In a report published last week, Palo Alto, Calif-based Radicati Group Inc. said that Microsoft Exchange currently holds a 31% share of the corporate messaging software market, with an installed base that will total 114.2 million mailboxes by the end of this year.

By 2008, Radicati predicts, the Exchange installed base will reach 225.2 million mailboxes and will have a 33% share of the messaging market.

When you look at the [5.5] migration path, it's generally more complicated than most companies are accustomed to.
Teney K. Takahashi
Radicati Group analyst

Teney K. Takahashi, a market analyst with Radicati, said that, with the end near for Exchange 5.5, customers of that product will be faced with a choice of upgrading to either Exchange 2000 or Exchange Server 2003 or looking to messaging products from IBM Lotus, Novell Inc., Oracle Corp. and others.

Exchange 5.5 currently accounts for 40% of Exchange's installed base, which means that thousands of customers are potentially up for grabs. But for those who want to stick with Microsoft, it won't be an easy upgrade, Takahashi said.

"When you look at the [5.5] migration path, it's generally more complicated than most companies are accustomed to," he said. "It'll be more time-consuming. It will require them to take a better assessment of their requirements." For example, most companies using Exchange 5.5 run it on Windows NT, which is also being phased out. So, in order to migrate to Exchange 2000 or Exchange Server 2003, those customers will need to upgrade to a more modern version of Windows as well.

Takahashi said that, because of its total cost of ownership compared with other versions of Exchange, Exchange Server 2003 "is ultimately where most of the Exchange 5.5 users go." New features that improve TCO include lower acquisition costs, lower administration costs and increased reliability. He also said that many companies won't want to waste the in-house resources of their Microsoft Certified Systems Engineers (MCSEs) by leaving Microsoft's platform.

For those looking to defect, Takahashi said, two potential alternatives are Novell's GroupWise 6.5, which includes integrated messaging, and Oracle's Collaboration Suite, which takes a "database-centric" approach to messaging.

Both leverage Microsoft's Outlook client, an industry standard that few companies would want to deal with even if they migrated from Exchange. "That's a pretty important requirement for corporations, because they don't want to have to train end users as well as administrators and help desk staff," Takahashi said.

He said that he doesn't expect IBM Lotus to take much business away from Exchange because Lotus' "primary focus" is now on Workplace, which he described as more of a "middleware collaboration" platform than an e-mail client-server solution.

Ultimately, the degree to which competitors take messaging business away from Microsoft depends on how they position themselves on pricing, lease options and integrated features, Takahashi said.


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