SMBs Positive On Microsoft Online Exchange Launch but Questions Linger

Technology providers reacted favorably to Microsoft's announcement that is launching hosted versions of Exchange and SharePoint, two components of Microsoft's Business Productivity Online Suite (BPOS), aimed at small to medium-sized businesses. However, questions linger about security and Microsoft's innovation abilities.

Stephen Elop, president of the Microsoft Business Division, said at Monday's launch event in San Francisco that nearly 500, 000 users have already adopted Exchange Online since the October 2007 limited release for large enterprises. The San Francisco event marked the first time the services are available to all small and medium-sized businesses.

Elop acknowledged the launch represented a "generational shift" in the company's response to demand for cloud-based computing. Microsoft faces increasing competition from companies like Google and, which both offer applications based on cloud computing, which allow users to access technology-enabled services from the Internet.

Tom Ruffolo, president of eSecurityToGo in Irvine, Calif., said Microsoft certainly needs to be in the cloud computing space, and its offering should be attractive to SMBs. However he warned that small businesses should be aware of additional security measures they may need to employ. He recommended those companies consider other vendors. "I think for SMBs in general, I think the hosted solution makes a lot of sense, it just has to be coupled with the right level of security," he says. "It depends on the needs and focus of the business. Security is all about control."

As a small business owner, Ruffolo was optimistic that Microsoft's announcement would be beneficial to SMBs. "Generally speaking we're definitely in favor of SaaS solutions because they have so many positive attributes," he says. "What we can see is that the market is moving to provide fast solutions wherever and whenever they make sense, and for SMBs that happens often."

Microsoft will offer both services through one-year, automatically renewing agreements. Exchange Online costs $10 per user per month while SharePoint Online is priced at $7.25 per user per month. LiveMeeting will be $4.50 per user per month.

BPOS also includes Office Communications Server, which is currently in beta and is expected to debut in spring 2009. Microsoft says Office Communications Server Online would be priced at $2.50 per user per month.

Aaron Osgood, owner of Falmouth, Maine-based Streamline Solutions, says the announcement is particularly good news for small, "one man band" operations, because it allows start-ups to save money at a time where banks are freezing credit lines. "It lowers the barrier for entry from a cost perspective. It's cheaper to host it somewhere else because you don't have to host it internally, and you don't need the in-house tech support," he says.

Despite Microsoft's claim that the launch represents a so-called "generational shift" Osgood believes it may be too little, too late for the software giant. "They're playing second fiddle again, or at least trying to," he says. "They've lost their edge when it comes to innovation. They are a marketing company, not a software company."

Osgood admits Microsoft's Exchange offering is still likely to be a helpful service to SMBs. Some small companies are still wary of Google's advertising-based model, and he says Microsoft's well-known interfaces offer a competitive edge.

"It's almost automatic for SMBs, when they're buying PCs, to get Microsoft Office with some flavor of Outlook on it, and Outlook works really well with Exchange," he says. "If they have to choose to go into a Google web-based interface, there's still a learning curve. And there's no learning curve with Microsoft."