Sometimes things in the news just amaze me. For example, a Seattle Times column about poor security at Sea-Tac Airport—which I visit frequently—left me flabbergasted. I had much the same reaction from a Reuters story that quoted Microsoft senior vice president Chris Capossela as saying, "In five years, 50 percent of our Exchange mailboxes will be Exchange Online.” The article cites a Radicati Group claim that there are about 210 million Exchange mailboxes in 2008, with 319 million mailboxes expected in 2012. So, using those numbers, we should expect to see Microsoft hosting more than 150 million Exchange mailboxes by 2013 or so.

I’m going to ignore the question of whether Capossela is right. He has access to lots of data that I don’t about Exchange Server sales trends and product strategies, and I suspect he wouldn’t make a public prediction like this unless he was pretty confident in its accuracy. The more interesting questions are where Microsoft might get that many mailboxes and what such a change means to Exchange administrators, designers, and ISVs.

Where are these 150 million hosted mailboxes going to come from? We can divine some clues from the fact that the Reuters article mentions that Coca-Cola Enterprises has moved 70,000 seats from IBM Lotus Notes and Domino to Exchange Online. It’s no surprise that Microsoft would love to poach as many Lotus seats as possible. However, depending on whose market numbers you believe, Microsoft probably won’t be able to hit its target just by displacing Domino (and Novell GroupWise, and other systems) seats. On the other hand, Exchange Online has huge growth potential from two markets: government and education.

Universities, public school systems, and state and local governments provide messaging and calendaring to their users because they more or less have to, not because doing so provides an automatic productivity advantage or because it’s part of their core mission. Many universities have outsourced food service, janitorial work, and other similar tasks to save money; in that context, it sure seems reasonable to imagine Exchange Online capturing a major portion of those seats. To give you a sense of scale, the US Department of Education estimates that there are 83.5 million students, faculty, and staff across all levels of public and private schools in the United States (http://nces.ed.gov/programs/digest/d07/tables/dt07_001.asp?referrer=report). I couldn’t find any reliable statistics about the number of state and local government employees for nations across the world, but I’m betting that there are enough potential seats to give Microsoft a solid start on that 150 million number.

What effects will this movement toward Exchange Online have on the rest of the world? Capossela is careful to point out that Microsoft is pursuing a strategy of offering self-hosted software plus hosted services. Because organizations that want to continue using Exchange can do so, at a first approximation it might seem like there’s no impact. However, shrinking the number of standalone Exchange customers will have an impact on third-party vendors that sell hardware and software products that support Exchange. It will no doubt also have a profound effect on consulting shops and others who make a living helping customers set up and manage their inhouse Exchange environments. In addition, it will become increasingly difficult for existing Exchange hosting providers to compete on either price or service against Microsoft, due to economies of scale. I’m no psychic, but it would seem to be a wise idea to examine your organization—and your career path—with an eye toward what effects this transition might have on you and how to best manage it.

One final thought-provoking statistic: The Radicati Group forecasts only a 2 percent decrease in insourced Domino mailboxes compared to hosted and managed mailboxes, and a 7 percent drop (from 81 percent to 74 percent) for insourced Exchange mailboxes. This is a far cry from Capossela’s 50 percent, but we’ll have to wait a few years to see who’s right