Answers to 5 Key Hosted Exchange Questions

Earlier today, I raised five key questions about the hosted Exchange and hosted Unified Communications markets. Now, I've gathered a few answers to those questions at the Intermedia Partner Summit in Silicon Valley. Here are some clues about how VARs and MSPs are transitioning their hosted Exchange strategies.

Question 1: How are MSPs pitching hosted Exchange these days -- and can MSPs continue to differentiate from Microsoft's own Exchange Online and BPOS (Business Productivity Online Suite) offerings?

Key Thoughts: VP Bob Leibholz says Intermedia remains the only hosting provider offering hosted Exchange 2010 -- and most rival hosting providers won't be delivering hosted Exchange 2010 until at least June or July 2010. Translation: Intermedia's channel partners should have a lengthy lead on the competition, Leibholz says. Several MSPs here note that Intermedia's track record for meeting five-nines (99.999%) reliability is strong, which continues to be an attractive sales hook when pitching to customers.

Question 2: When should MSPs pitch basic Exchange vs. a true unified communications solution? And how can that transition to hosted unified communications potentially bolster recurring revenue?

Key Thoughts: Intermedia COO Jonathan McCormick made the case that hosted Unified Communications is a natural transition for customers that already leverage separate hosted PBX and hosted email services. McCormick was careful to reinforce Intermedia's continued commitment to hosted Exchange. He conceded that hosted Exchange now has "thin margins" for the partner ecosystem, but it's still a fast-growing market.

On the hosted Unified Communications front, McCormick didn't go into specific margins and revenue models, but he said the margins will be significantly higher than the hosted Exchange market. Also, McCormick mentioned that unified communications involves 7 components -- though I didn't have time to write down that list during his presentation. I'll be sure to track it down for another blog entry later today.

Question 3: How can big service providers like Intermedia both compete with Microsoft and cooperate as a hosted Exchange partner? It has to be a pretty intense relationship these days, considering Microsoft's aggressive Exchange Online price cuts.

Key Thoughts: Intermedia is maintaining a careful balancing act, no doubt. The ongoing Microsoft partnership means Intermedia continues to receive key code updates that Microsoft rolls out to hosting partners. And there isn't any Microsoft BPOS bashing going on here. Intermedia's strategy seems pretty darn clear: Continue to promote hosted Exchange, and the company's first-mover advantage (over other third-party hosting provider) with hosted Exchange 2010, while also ramping up the hosted Unified Communications business, with an assist from Unison Technologies.

Question 4: Where are the opportunities with hosted SharePoint?

Key Thoughts: Actually, there isn't much hosted SharePoint discussion here. On the one hand, that's surprising since many VARs and MSPs are interested in SharePoint. But on the other hand, betting the house on hosted SharePoint would mean Intermedia once again is competing head-on with Microsoft BPOS. Hence, Intermedia is spending most time here talking up both hosted Exchange and newer opportunities in hosted Unified Communications.

Question 5: How are MSPs customizing hosted Exchange, SharePoint and other platforms for health care, financial services, legal and other vertical markets?

Key thoughts: I haven't heard clear answers here yet. But here's an anecdote. I just met an MSP from Houston, Texas. They're charging $350 per user -- yes, $350 per user -- per month for technology as a service (TaaS). Sounds like the solution targets multiple verticals. And it includes both hosted and on-premise offerings. Customers receive on-premise servers -- which the MSP continues to own. The MSP's CEO says it takes about 8 months for a customer engagement to become profitable. But from that point forward, the engagements are wildly profitable. I'm checking to see if the MSP CEO is willing to go on the record about his strategy.

I'll be back throughout the day with more perspectives.

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