Microsoft Sees Strong Demand for Hosting Solutions as Software as a Service Increases in Popularity

Editors’ Note, July 24, 2006 –
The sixth paragraph below, about global customer adoption, has been corrected since original publication to reflect that the 7-percent growth rate refers to total active sites, not servers.

LAS VEGAS — July 18, 2006 — Changes in the way software is delivered to businesses and consumers are spurring strong demand from service providers for Microsoft® hosting solutions, Microsoft Corp. today announced at HostingCon 2006. Microsoft has seen the popularity of its solutions in the Web server industry grow dramatically in the past year, driven by new customer deployments by such hosting providers as Intergenia AG in Germany and Portal Tone in South Korea.

At the same time, Microsoft has also focused on expanding its partner ecosystem. For instance, service providers such as NaviSite Inc. and OpSource Inc. have launched incubation centers to assist independent software vendors (ISVs) in creating software as a service-enabled application. In addition, software companies SWsoft Inc., SMBLive Corp. and WebHost Automation Ltd. have created new hosting applications for the Windows® platform that enable service providers to offer more choices to their customers.

With near-ubiquitous broadband penetration rates, decreasing hardware costs and high availability of service, the vision of delivering software applications over the Internet, called software as a service (SaaS), has now become a reality. As a result, hosting providers, largely forgotten after the Internet bubble crashed and the application service provider model failed to reach fruition, are now positioned to act as a primary software delivery channel for everyone from consumers to small businesses and large enterprises.

Microsoft has aligned its hosting group to enable service providers to capitalize on the changing market dynamics brought about by the SaaS model and to derive new revenue streams. Microsoft, through three solutions (Solution for Hosted Messaging and Collaboration, Solution for Windows-based Hosting Version 4.0, and the Solution for Windows-based Hosting for Applications) provides the platform, tools and guidance necessary for service providers to develop and deploy SaaS-enabled applications and manage increasingly complex infrastructure.

“The way people use the Web has changed markedly over the past several years,” said John Zanni, director of Worldwide Hosting at Microsoft. “In the past, both consumers and businesses created relatively simple sites with features such as photo albums and product displays. Today increasingly rich user experiences and almost unlimited bandwidth have driven demand for highly interactive applications delivered through the browser as a service. The success we’ve had in the past year in expanding our partner ecosystem and the increasing popularity of our services help reaffirm our strategy of enablement.”

Global Customer Adoption

Microsoft has seen its percentage of total active sites across all domains grow more than 7 percent in the past year, from 23.6 percent in July 2005 to the current rate of 31 percent, spurred by deployments with many of the industry’s largest providers. Microsoft now has 84 service providers that utilize Hosted Messaging and Collaboration and 142 hosting providers that use Windows-based Hosting. Furthering its customer base, Microsoft has extended its relationship with German Web hosting provider Intergenia and has announced a new relationship with Korean hosting provider Portal Tone.

“We had to manage hundreds of thousands of small e-stores that actively upload product catalogs and sell their products online,” said Philhwan Yun, chief executive and founder of Portal Tone. “Microsoft’s Windows platform provided the best performance in hosting and managing e-stores on a large scale. We look forward to continue working with Microsoft to utilize its hosting solutions for our offering to major portals and e-commerce shopping malls.”

Intergenia, a leading Web hosting company based in Germany, has deployed a wide array of Microsoft hosting solutions to deliver applications and services to its broad customer base. With more than 2.2 million active sites hosted and more than 20,000 dedicated servers in data centers in and the U.S., the company has recently been declared the second-largest Web hosting provider in the world by the British market research firm Netcraft Ltd. More than 95 percent of Intergenia’s active sites are hosted on the Microsoft Solution for Windows-based Hosting 3.5. In 2005 Intergenia was one of the first German hosting providers to launch Hosted Exchange and has since deployed the solution to a growing number of customers.

“We are seeing a significant upswing in the software-as-a-service market in Germany, and Microsoft solutions for Windows-based Hosting and Hosted Messaging and Collaboration are helping us to capitalize on this opportunity,” said Thomas Strohe, founder, Intergenia AG. “Our customers expect a high level of security and service availability, and because of the ease of deployment and the tools and management capabilities in Microsoft’s solutions, we are able to provide both. As companies become more familiar with the software-as-a-service model, we expect to see demand grow even stronger for more sophisticated services and applications.”

Expanded Partner Ecosystem

To fully benefit from the new landscape for delivering applications to end users, hosting service providers as well as independent software vendors must adapt many operating procedures that have been the norm. Several service providers, including NaviSite and OpSource, are working with ISVs to create and deliver SaaS-enabled applications through incubation centers and new service offerings using Microsoft solutions.

One such solution, the NaviSite-Microsoft ISV Sandbox, offers a cost-effective, security-enhanced and ready-made infrastructure for testing and deploying SaaS offerings. The Sandbox, which utilizes Windows-based Hosting for Applications, provides ISVs with a low-risk, flexible environment in which to test applications and access methods, accelerating time-to-market and reducing costs of testing, development and deployment.

SMBLive Corp., which offers simple-to-use, inexpensive and IT-less hosted Web applications for small and medium-sized businesses (SMBs), has created a private-labeled SaaS offering developed on the Windows SharePoint® Services platform. SMBLive’s applications help incumbent telecommunications providers reach the estimated 15 million SMBs that have limited or nonexistent IT resources.

“Ubiquitous broadband networks, the proliferation of mobile computing, and the power of search marketing are a few of the trends leading to a profound change in how applications are delivered and consumed,” said Matt Howard, CEO of SMBLive. “With Windows as our platform of choice, our channel partners can leverage their existing investments in Microsoft technologies to quickly and easily introduce SaaS offerings that are specifically designed to meet the needs of small-business customers.”

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Microsoft, Windows and SharePoint are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

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