Microsoft Online Services are reasonably priced compared to the cost of running equivalent on-premises software.

Consider what’s likely to be a common purchase of Microsoft Online Services:

• Exchange Online (email/calendaring/address books)
• Office Communications Online (presence/instant messaging)
• Office Live Meeting (Web conferencing)
• SharePoint Online (shared spaces/workflow management)
• Exchange Hosted Services (email archiving/spam and malware filtering)

The price varies on whether elements are purchased singly or in a bundle, but it seems $15/user/month will be common, with volume discounts of around 20%.

Using the on-premises versions of Exchange, OCS, and SharePoint, Microsoft typically receives annual income of about $60 to $80/user/year; or $5-$7/user/month. For example, consider the Small Business Server Standard Edition pricing, which basically provides Exchange, SharePoint, and anti-spam and anti-virus for Exchange. For 100 users, it costs:

• $1,089 for the server license and five-user clients access licenses (”CALs”)
• $7,315 for 95 CALs, which are payable annually

Throw in OCS and Office Live Meeting, and you get annual software license fees of perhaps $100 to $150/user, or around $10/user/month.

Looked at in this light, the pricing of Microsoft Online seems reasonable. True, $15/user/month is higher than the on-premises software licenses, but you don’t have to factor in the cost of servers and their software. Plus, more importantly, the level of internal IT support, and thus IT support costs, are substantially lowered.

Note that Microsoft plans to offer a deskless version of these collaborative services, where access is solely via Web browser, during 1H09. A basic version of Exchange and SharePoint will be $2/user/month.

For more details, see

• Pricing for individual Microsoft Online Services
• Pricing for Microsoft Exchange Hosted Services
• Pricing calculator, based on services chosen and number of seats
• Exchange CAL pricing
• OCS CAL pricing
• SharePoint Server CAL pricing

… David Ferris and Nick Shelness