Microsoft announced the general availability of the new version of Exchange today, Exchange 10. The clear focus in the press release is on efficiency and cost cutting, not a bad selling point in today's economic environment, with businesses generally pretty comfortable with Exchange 2007 or '03.

But despite the outward focus on server application sales for on-premises installation, internally Microsoft may be looking at E10 as one of the last releases aimed directly at IT departments, or maybe even as the first oriented primarily toward cloud-based mail service. Much of the emphasis on E10 internally during the development cycle, I am told, revolved around increasing features and robustness for its operation in a massive data center environment... Microsoft's own data center, as it happened, where it runs Exchange Hosted Services.

This is a smart move for Microsoft, one that may serve to put it ahead of the game for once when it comes to online services. The economics of hosted e-mail are among the clearest of all cloud services, the history the longest, and the robustness the greatest. If there is a place where SaaS is tipping into the mainstream, hosted e-mail may be it. And Exchange isn't simply popular because Microsoft has leveraged cunning marketing and monopoly powers to make it so; Exchange succeeds because when combined with Outlook, it provides a powerful and in-demand platform for corporate communications that competitors do not yet successfully match. I suppose you could argue that the control over both the server side and the client side does make this a monopolistic effort, but if so it illustrates on of the benefits of a monopoly: it does a lot of complicated interface things pretty successfully.

If Microsoft can move that magic over into the cloud (and the internal focus seems to suggest that's the plan) it stands to hang on to a good segment of the mail market moving forward.