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Stephen Elop, president of the Microsoft Business Division, announced the news Monday morning at a customer and partner event in San Francisco. Exchange Online and SharePoint Online are part of Microsoft's "software plus services" strategy, which banks on business customers wanting a mix of on-premise software and hosted services in their environments.
"The reality is, you need the cloud, you need local -- you need all of these things working together," Elop said.
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One of Microsoft's most-hyped competitors in the hosted services market is Google, which offers hosted email, collaboration and business productivity software through its Google Apps offering. Elop did not mention Google by name during his speech yesterday, but he talked up the differences between Microsoft Online Services and its competitors -- namely, the "enterprise-class" reliability, scalability and support offered by Microsoft and its partners.
"That's a big part of the value proposition," Elop said.
Elop also stressed that partners have the opportunity not only to sell and manage Exchange Online and SharePoint Online, but to customize the services for customers.
"Partners are building on the Microsoft Online Services platform, and that's part of Microsoft's commitment to the ecosystem," he said.
Elop brought on stage Tim Tisdale, chief technology officer for ThoughtBridge, an Atlanta-based partner. ThoughtBridge was close to losing a deal because a customer's budget was cut, but ThoughtBridge showed the customer how to save on up-front costs with Microsoft Online Services, and the partner was still able to build a custom human resources solution on top of the services.
Tisdale said his experience working with Exchange Online and SharePoint Online has helped him overcome some initial reservations he had about software plus services.
"I was a little nervous at first," he said. "We have guys who install SharePoint, and some of the skeptics said, 'Well, there's not going to be [installed] SharePoint anymore."
Even though Exchange Online just became available Monday, Microsoft has already sold it into 500,000 seats, Elop said. The company predicts that within five years, 50% of all seats in businesses will have hosted email or a hybrid of on-premise and hosted.
The Microsoft Online Services family also includes Dynamics CRM Online and Office Live Meeting. Next year the company will release Office Communications Online, with plans to make all of its software available as hosted services eventually.
"We expect all of it to be that way in the near future," Elop said.