ASP deals target Exchange management

Microsoft last week announced deals that will allow users to outsource the management of Exchange groupware and messaging, but analysts say scalability may be a challenge.

Microsoft said application service providers such as Electronic Data Systems and Hewlett-Packard will let users rent Exchange 5.5 and, later, Exchange 2000.

Microsoft and its application service providers are targeting resource-constrained small to midsize businesses and large companies that are "stalled in deployment or upgrades," a Microsoft official said.

David Ferris, president of Ferris Research in San Francisco, said outsourced messaging is in demand, but Exchange's low seats-per-server ratio may increase costs.

"There are lots of people that have Exchange that want to outsource it, and demand from [information technology organisations] will encourage more outsourcers to host it," he said.

But for outsourcers, "if they want a messaging product that scales, Exchange would not be the product of choice," he said.

Individual application service providers determine pricing per mailbox, as well as installation and management fees, Microsoft officials said.

USinternetworking, is one of Microsoft's application service providers. It has four customers that range from 100 to 1,200 seats renting Exchange, said Nick Magliato, president of enterprise messaging. Pricing averages about $25 per month per user, based on 1,000 users.

Microsoft recently started rolling out its hosted applications initiative. In November, it launched Microsoft Office Online, which lets users rent the Office software suite. In October, it teamed with Cisco Systems to offer tools and services to application service providers.