Microsoft recently announced that it was dropping the Essential Business Server (EBS) product. Oh, sure, the product still exists and will be supported, but as of June 30 (the end of Microsoft's fiscal year), future development will halt. Therefore, EBS is, for all intents and purposes, dead where it stands.

Microsoft's announcement makes clear that EBS, which is really a bundle of existing server products, fell victim to IT trends that Microsoft didn't anticipate (or didn't plan for properly—essentially the same thing). Chief among them are virtualization and cloud computing, both of which have been mentioned as threats to Microsoft Exchange Server before. What does the demise of EBS portend for Exchange itself?

"Not much" is my immediate reaction. Part of the value proposition for EBS was that it combined all the Microsoft products you'd need to run a mid-sized business, including Microsoft SQL Server, Exchange, Windows Server, and elements of the Forefront product line. None of these products are themselves affected by the end of EBS development.

Organizations who chose EBS as an all-in-one package must now choose between moving to the standalone components that made up EBS, moving to hosted services such as Microsoft Business Productivity Online Standard Suite (BPOS), or moving to competing products such as Google Apps or Lotus Domino. Companies that were attracted by the integration of EBS components seem like good candidates for the integration found in BPOS. Because many companies are still uncomfortable with the idea of The Big, Bad Cloud, I expect that a fair number of EBS customers—perhaps even a majority—will take Microsoft's offer to migrate to the individual EBS components, and perhaps run them virtualized.

You can make a legitimate argument that the advent of virtualization technologies will eventually kill off most suites that rely on (or even offer) multiple server roles or products integrated into one. The blocker here is availability and uptime: Centralizing all your server capabilities onto separate VMs that run on a single physical host is a recipe for sadness when that host fails. Hardware vendors offer highly-redundant systems that can mitigate this risk, but they're often more expensive than less-redundant standalone servers. It's not clear whether hardware partitioning and robust storage will drop in price enough to make them attractive alternatives for mid-size customers.

So, with all that in mind, I think Exchange will continue to thrive, although some customers will choose to move to hosted service offerings instead of running their own Exchange servers. Microsoft has already invested a great deal of time and effort in improving the integration between the on-premises and hosted versions of Exchange 2010, and I expect that integration to improve further over time.

There's another effect to watch out for, though . . . on the very successful Small Business Server (SBS) product line. If you look at what SBS 2008 offers and compare it to what's currently available from the BPOS product line, it looks like SBS's value add is focused on VPN access and (optional) SQL Server capability. If I were on the SBS team, I'd be trying really hard to find new value to add to the server product, perhaps in the form of a simple appliance edition of SBS that relies on BPOS for collaboration and communications. In fact, adding BPOS to SBS would let SBS customers take advantage of Microsoft Office Communications Server, a product that—despite its great abilities—is way too complicated and expensive for the SBS target market.

We'll have to wait and see what happens. In the meantime, debate over whether EBS was ahead of its time or an idea that never should have come to fruition will undoubtedly continue.

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