Is Exchange cheaper to own?

Microsoft and Lotus have found a new reason to bicker in the long-running battle for control of the groupware software market.

3 min read
The war of words continues.

Microsoft and Lotus Development have found a new reason to bicker in the long-running battle for control of the groupware software market.

Two separate reports released this week claim that the total cost of ownership (TCO) for Microsoft's Exchange messaging server is substantially lower than that of its main competitor Lotus Development's Notes.

One study, conducted by Creative Networks and sponsored by Microsoft, not surprisingly finds TCO to be much lower for Exchange.

But the second study--commissioned by both companies and conducted by the Radicati Group--found that among 110 Fortune 1000 companies the TCO for Lotus Notes averaged $166.66 per-user, while the per-user average for Microsoft Exchange was $64.93.

The Radicati results are especially stinging to IBM subsidiary Lotus because it cosponsored the study, which essentially settles nothing. Now, the company claims the study is flawed, because it's based on a faulty apples-to-oranges comparison of Notes/Domino and Exchange.

In fact, a company spokesperson said the company is currently in discussion with the Palo Alto, California-based research firm because "there is still the option for Lotus to work on the study with Radicati? [Lotus] takes issue with the study. The study didn't reflect the full range of complex issues."

But Sara Radicati, the group's founder, told CNET News.com, that the report is complete and unflawed.

"They obviously are not pleased with the results. But life is rough," Radicati said from London.

But other analysts tended to side with Lotus, claiming that the numbers can be misleading.

"Most companies still use Exchange primarily for email, whereas they use Notes for more complex solutions," said Mark Cecere, an analyst with Giga Information Group. "A lot of the TCO is in cost of labor. This will be more for complex systems."

Although the Radicati study, as well as a second report by Creative Networks, find TCO amongst corporate users is higher for Notes than for Exchange, it too points out that Lotus's messaging platform is a more complex animal than Microsoft's Exchange.

Overall, according to the Radicati study, the higher TCO associated with Notes is due to its "richer workgroup functionality and security features, which in turn require higher training costs."

As both Lotus Notes and Microsoft Exchange have improved in functionality, the configuration costs per user of both systems went down if compared to configuration costs shown last year, according to the Radicati study. Exchange and Notes cost approximately $13 per user to configure, while in 1997, Notes cost $26.66, and Exchange $18.67.

The Radicati study, unlike the Creative Networks study, also looked at TCO for Netscape Communications' Messaging Server and Sun Microsystems' Internet Mail Server (SIMS).

Netscape Mail and SIMS showed lower TCO than both Notes and Exchange. However, given the much smaller sample size, these values, the Radicati study stated, cannot be considered valid for statistical comparison purposes. It noted that Netscape has a TCO of $61.14 per user and Sun has a TCO of $12.05 per user a year.

As for Notes and Exchange, Cecere said the TCO numbers would be closer if the two were compared on just email services alone. "If you compare the two whole systems it is like comparing apples to oranges."

The Creative Networks study found that the TCO per user per year for Exchange was $484.65, compared to Lotus Notes $594.51. This study considered training, development, administration, and hardware and software acquisition costs. The Radicati study only considered configuration, training, and administration.