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Exchange price is right to Microsoft

The company releases the latest version of its groupware, offering some price cuts but reinforcing per-client license fees.

Microsoft (MSFT) today officially unveiled the latest version of its Exchange groupware, offering some price reductions but reinforcing the usage of per-client license fees.

For Microsoft Exchange 5.0, the company has reduced the price of its Enterprise Edition from the previous release by $500, to $3,549. The Enterprise Edition includes server software and 25 client licenses.

Pricing for the Standard Edition, which includes five client licenses, remains unchanged at $999. Companies that upgrade from version 4.0 pay only for the server software, which runs $839 or $349, respectively, the company said.

In this long-awaited release, Microsoft has its Outlook client software and support for the messaging protocols SMTP and POP3, the LDAP directory protocol, the SSL security protocol and NNTP for news reading. Microsoft has also added the ability to store HTML documents in their native form, eliminating the need for data conversion.

However, Microsoft still charges for access to Exchange data through a Web browser. In a departure from its groupware arch rival Lotus Development and many Web-based software developers, Microsoft requires client access licenses for users who use Exchange public folder stores with Web browsers, even if they do not have email boxes on the server.

The move left Gartner Group analyst Tom Austin asking: "Why are they charging for what the competition gives away for free?"

"Microsoft is establishing an interesting but dangerous precedent," Austin said. He predicts that the client licenses will run into thousands of additional dollars in deployment costs for companies that want to give suppliers and business partners access to the data stores.

Yet Exchange product manager Greg Lobdell defended the pricing as part of the company's efforts to revamp costs to fit today's online business realities. "We are trying to figure out a business model that works," he said.

Lobdell said companies can assign client licenses on a "concurrent user" basis, which essentially lends the client to any number of anonymous users who would have access to public folders but would not have mailboxes or other rights on the system.

For instance, Lobdell said a company interested in setting up a discussion group at its Web site might purchase a groupware package with 100 user licenses, which would let any 100 people at any one time use the discussion database.

"It is a very difficult business model to look at when servers are selling at a few hundred dollars apiece," Lobdell said.