REDMOND, Wash., December 14, 1998 — 1998 has been a banner year for Microsoft Exchange Server, the industry’s leading messaging and collaboration server. The product was introduced only 2-1/2 years ago but already has become the most successful server product in Microsoft history, selling more than 20 million seats. The product’s successes have included record-breaking quarterly sales figures, third-party validation of the low total cost of ownership (TCO) of Exchange compared to Lotus Notes, large-scale customer messaging and collaboration deployments, and dramatic increases in the Exchange Independent Software Vendor (ISV) and partner community.
Exchange Outsells Lotus Notes in 1998
This year’s momentum for Exchange began with the sales figures for the first quarter of the year released by Electronic Mail and Messaging Systems (EMMS), indicating that for the first time, Exchange had outsold Lotus Notes, the established market leader with a 10-year track record. Exchange sold 3.05 million seats in the first quarter versus 2.7 million for Lotus Notes. The good news continued in the second quarter, with Exchange selling 3.3 million seats versus Notes’ 3.0 million, according to EMMS.
“Exchange has hit the sweet spot of the market,” said Eric Arnum, editor and publisher of the EMMS newsletter. “It is the right product in the right place, particularly with its Internet connectivity.” While the final tally for 1998 is not yet available from EMMS, Exchange has outsold Notes in the first three quarters of the year, selling a cumulative 9.8 million seats compared with Notes’ 9.2 million.
The success of Exchange in the sales arena was also validated by an International Data Corporation (IDC) mid-year report, released in September, that confirmed Exchange outsold Notes in the first six months of 1998. These sales figures indicate that customers are choosing the Exchange messaging and collaboration infrastructure for its reliability and scalability.
“Although Notes still has a lead in terms of total number of seats, the Microsoft Exchange customer base is growing rapidly,” said Mark Levitt, an analyst with IDC.
Exchange Leads as Fortune 50 Standard
In August, a survey from analyst firm The Radicati Group, Inc. showed that Exchange is the leading messaging server among Fortune 50 companies, with 52 percent standardizing on Microsoft’s product. In comparison, the study reported Lotus Notes as the standard at only 24 percent of Fortune 50 companies. This acceptance of Exchange among the world’s largest companies helped demonstrate the product’s leadership as a messaging platform. Many Exchange customers have reported that as they complete their enterprise-wide deployment of the product, they are beginning to build workflow, customer interaction, tracking and routing solutions onto the platform.
Exchange Community Sees Dramatic Growth
ISV support for Exchange has grown significantly as well. At the beginning of 1998, 250 ISVs were developing Exchange solutions; by the end of this year, the count has more than tripled to nearly 900. With such strong ISV support, customers can benefit from a wide array of tools and add-on products that enhance their Exchange deployments in areas such as unified messaging, computer telephony, fax, virus checking and administration tools.
“We develop solutions for Exchange because it’s a strong messaging platform that our customers are now looking to extend to collaboration,” said Ellen Roehm, Director of Marketing for Eastman Software. “With the added benefit of the tools and training we’ve received from Microsoft, we’ve been able to significantly grow our Exchange business in the past year.”
Exchange continues migration push with leading tools
September brought a highly successful Microsoft Exchange Conference 98, with more than 4,000 attendees, the highest attendance ever for the event. At the show, Microsoft broadened Exchange leadership in the area of migration and coexistence with other products by announcing the Web availability of a free suite of tools for cc:Mail connectivity and migration, and for migration from and coexistence with Lotus Notes.
With the addition of these new offerings, organizations were then supplied with all the tools necessary to migrate users from cc:Mail to Exchange and to move users and applications from Lotus Notes to Microsoft Exchange. These free tools significantly reduce the cost of migration for organizations switching from either cc:Mail or Lotus Notes to Exchange Server.
“Many companies are looking to move from legacy systems as part of their year 2000 planning,” said Matt Cain, vice president of workgroup computing strategies at the META Group. “Exchange Server is well-positioned as a client/server messaging platform, with a set of tools for migration and connectivity with other messaging systems. I’ve spoken with many customers who are migrating to Exchange as a way to build a single messaging infrastructure.”
Exchange Total Cost of Ownership Significantly Lower than Lotus Notes
Most recently, two analyst studies released in October indicated that Exchange’s total cost of ownership (TCO) is significantly lower than that of Notes. First, Exchange Server was found to be significantly less expensive, easier to administer and more reliable and scalable than Lotus Notes/Domino, according to an independent study by Creative Networks, Inc. For example, the study found that Exchange is 55 percent less expensive than Lotus Notes/Domino for both direct and indirect costs. It also found that Exchange was 64 percent more reliable than Lotus Notes/Domino when evaluating minutes lost per month due to downtime.
A second study conducted by The Radicati Group, and co-sponsored by Microsoft and Lotus Development Corporation, found that Exchange Server offers a more reliable messaging and collaboration environment at a substantially lower total cost of ownership compared to Lotus Notes. In addition, costs for Exchange Server have gone down over the past year. In particular, administration and training costs have decreased dramatically, while Notes costs have risen in the same period. According to the study:
Total cost of ownership was only $64.93 per Exchange Server user, compared to $166.66 per Lotus Notes/Domino user. This represents 61 percent savings for organizations that have deployed Exchange instead of Notes.
Exchange Server is nearly three times more reliable and available than Lotus Notes/Domino as measured by downtime costs ($13.05 for Exchange vs. $36.32 for Lotus Notes/Domino). The study also found that downtime costs for Exchange improved dramatically over the past year, dropping 70 percent, which downtime costs for Lotus Notes/Domino fell only 18 percent year to year.
Annual administration costs for Exchange customers decreased 64 percent from the previous year, dropping from $70.00 to $25.78 per user. During the same period, those costs increased 44 percent for Lotus Notes/Domino customers, growing from $51.73 to $91.47 per user.
Training costs for Exchange Server customers dropped from $51.33 to $41.96 per user, a 19 percent saving. Meanwhile, Lotus Notes/Domino customers saw their training costs rise to $80.26. That difference represents a cost saving of 48 percent for customers who choose Exchange Server over Lotus Notes/Domino.
Both of these studies helped to quantify Exchange’s low TCO, an important development since TCO is a variable that is increasingly important to companies making decisions regarding their messaging platforms. “We migrated to Exchange earlier this year, but the TCO data validates our decision above and beyond the gains we’ve seen in productivity and reliability, not to mention reduced training and administration costs,” said Howard Jones of Snapper, Inc.
Customer feedback has been invaluable in making Exchange successful, from the original concept development to creating versions 4.0, 5.0, and 5.5 – and now in developing Platinum, the next version. “1998 was a standout year for Exchange, and we look forward to delivering more of what customers are asking for in 1999 and for many years to come,” said Russ Stockdale, Director of Server Applications at Microsoft.