Exchange Server 2007 is offered in two editions, Standard and Enterprise, differentiated by a few key scalability and availability capabilities and priced exactly the same as their Exchange Server 2003 predecessors. However, rather than a single Client Access License (CAL) being required for each user or device, two different CALs are required for each client to access the complete server feature set. As a result, the licensing of Exchange becomes more complicated and the aggregate price will rise for organizations that want to access some of Exchange Server 2007's most compelling new features.

Two Server Editions

With Exchange Server 2007, Microsoft continues its longtime practice of offering a Standard Edition (SE) and an Enterprise Edition (EE), the latter containing scalability and availability enhancements targeted at organizations with large numbers of users or stringent service level requirements.

In the past, one of the major differences between the editions was mailbox storage capacity—for example, Exchange Server 2003 R2 SE's mailbox storage is capped at 75GB while Enterprise Edition has no artificial limit. With the introduction of Exchange Server 2007, SE customers get unlimited mailbox storage capacity. However, two other historical points of differentiation remain: automatic failover using clustering and the ability to subdivide the mailbox data storage.

Automatic Failover

As was the case for prior versions of EE, Exchange Server 2007 EE can run in clusters of machines, using the Cluster Services built into the Enterprise and Datacenter Editions of Windows Server. When one Exchange Server fails or is taken offline for maintenance, another quickly assumes its load. After a brief delay (under a minute), users regain the ability to send and receive messages as well as access to all their server-based mail folders. Without clustering, users would experience an interruption in e-mail service until an administrator manually repaired or replaced the broken system. If an organization's Exchange Server system is composed of multiple machines operating in specialized Exchange-related roles (e.g., one at the network perimeter dedicated to helping to block spam and viruses, another dedicated to providing voice mail), only machines handling the message stores would need EE.

With Exchange Server 2007 EE, computers in a cluster do not have to share the same disk volume. This contrasts with Exchange Server 2003 EE, where all computers in a cluster had to share at least one volume. This feature makes it possible to place cluster nodes in separate geographical locations to protect against a sitewide disaster.

Subdividing the Mailbox Database

With Exchange Server 2007 EE, administrators can subdivide mailbox and public folder storage into up to 50 independent units (sometimes called storage groups), whereas SE allows subdivision into a maximum of 5 units. (With Exchange Server 2003, the corresponding limits were 20 and one, respectively.) It is not uncommon for larger organizations (including Microsoft itself) to split up the Exchange mailbox database so that each subdivision contains mailboxes for only a few hundred users.

Administrators subdivide the mailbox database for the following reasons:

Limit impact of data corruption. If users are spread across multiple database subdivisions, the loss of a single subdivision affects only part of the organization.

Minimize restore time. Data for a subdivision can be restored more quickly from backup than the entire message database.

Administrative flexibility. Breaking the mailbox database into subdivisions provides an easy way to delegate responsibility for specific groups of users to different administrators, or to give different groups of users different mailbox properties, such as mailbox storage capacity limits. It is also a convenient starting point for implementing different service level agreements for different sets of users—for example, performing tape backup more frequently for the legal department than for other users.

Two Types of Client Access Licenses

To access the full Exchange Server 2007 feature set, customers must now purchase two different CALs—a Standard CAL and an Enterprise CAL—for each user. Each CAL grants the right to access to a different set of Exchange features. This double CAL requirement is new to Exchange Server 2007 (and is also used with SharePoint Portal Server 2007 and Office Communications Server 2007); previous versions required only one CAL to access the complete server feature set.

Even though the new CALs carry the "Standard" and "Enterprise" monikers, they bear no relationship to the Standard Edition and Enterprise Edition of the server software—both CALs provide the right to access either edition of the server, and both editions of the server provide the same user features. Furthermore, while Exchange Server 2007 Enterprise Edition remains suitable only for large customers, even the smallest customers may want to license the Exchange Enterprise CAL.

Features Requiring an Enterprise CAL

The Exchange 2007 Standard CAL provides the right to access e-mail, calendars, contacts, tasks, public folders, and Microsoft Office Outlook Web Access—in other words, the main features of Exchange Server 2003.

The Enterprise CAL is required for the right to utilize a subset of features new in Exchange Server 2007, such as unified messaging and certain legal compliance-related capabilities.

An Enterprise CAL is required to use any of the following features:

Unified messaging. Exchange Server 2007 can interface with an organization's existing private branch exchange (PBX) and put a user's voice mail and incoming faxes into the same inbox as e-mail. Exchange Server 2007 also allows a user to access this unified inbox—including calendar, contacts lists, and corporate directory—from a PC, Web client, or mobile e-mail client, as well as from a standard telephone using voice commands. An Enterprise CAL is required for each user that uses any unified messaging feature.

More granular control over journaling. Exchange Server's journaling feature, typically used to implement legal message-retention requirements, archives messages that pass through an Exchange Server—based e-mail system, including intracompany e-mails, outgoing e-mails to external users, and incoming e-mails from external users. In Exchange Server 2003, organizations do not have very fine control over which messages get journaled. In contrast, an Exchange Server 2007 enhancement called per-recipient journaling (also referred to as "premium journaling" and "flexible journaling" in some Microsoft documents) allows only specific users or groups of users (such as the legal department) to be targeted for journaling. This lets customers avoid archiving large volumes of unnecessary messages. An Enterprise CAL is required for each such targeted user.

Managed folders. A feature new to Exchange Server 2007, managed folders make it easier for an organization to retain particular types of messages as mandated by company policy, government regulations, or legal needs, as well as to remove unneeded content that has no business value and may pose unnecessary legal risk. Administrators define a managed folder and its retention rules (e.g., automatically delete any message after a year), and then deploy the managed folder to users' mailboxes. To the user, a managed folder appears similar to the other folders in their mailboxes, except that it cannot be moved, renamed, or (in most cases) deleted. An Enterprise CAL is required for each user who is assigned one or more managed folders.

Antivirus and enhanced antispam protection. Microsoft offers three antivirus and antispam options for Exchange Server 2007. The right to use Microsoft's entry-level antispam technology is included with the Standard CAL. Called the Intelligent Message Filter (IMF), it was first offered with Exchange Server 2003 SP2 and provides no antivirus protection.

The other two options include antivirus protection as well as a superior antispam solution (including more frequent and automated updating of spam signature files, for example). The simplest—and often the least expensive—way for customers to get these options is to purchase an Enterprise CAL for every user or desktop in their organization, and get an ongoing Software Assurance (SA) subscription for each of these Enterprise CALs.

The first of these two more advanced options is Forefront Security for Exchange Server, an on-premise solution that runs on an organization's Exchange servers. It is the combination and renaming of the Antigen Spam Manager product and the Antigen for Exchange antivirus and content-filtering solution, both of which were obtained when Microsoft acquired Sybari in early 2005.

The second option is Exchange Hosted Services Filtering, a service hosted and managed at Microsoft's own datacenter. Exchange Hosted Services uses message filtering and storage services obtained as part of the FrontBridge acquisition in mid 2005. Exchange Hosted Services offers other services besides antispam and antivirus, such as e-mail archival, but these other services require additional monthly fees per user.

License Compliance Difficulties

With the exception of the Forefront and Hosted Services Filtering options, purchase of Enterprise CALs is not an all-or-none proposition; customers may purchase Enterprise CALs for only a select group of users.

But as a practical matter, licensing Exchange this way could make it exceptionally difficult to ensure ongoing license compliance, because it will be easy for administrators or even users to inadvertently violate the CAL requirements. CALs are only pieces of paper and compliance is on the honor system. There is no CAL-related software installed on each client machine that software asset management tools can inventory, and Exchange does not meter users or track CALs. The feature set available to a user is determined not by the CALs they have but by the features installed on the Exchange server system at the time it is deployed.

Licensing and Pricing Details

With Exchange Server 2007, the price of licensing the server software remains the same as Exchange Server 2003, as does the cost of licensing the client—unless one opts for the special subset of features enabled by the Enterprise CAL. Microsoft has introduced some special offers to help blunt the extra cost associated with the Enterprise CAL, and to provide an incentive for customers to purchase SA for their CALs. (SA gives customers the right to upgrade to any new version released during the term of a volume licensing agreement in exchange for payment of an annual fee.)

Licensing the Server

Customers with SA on their existing Exchange Server 2003 license are entitled to upgrade to the equivalent Exchange Server 2007 edition at no charge. For customers without SA, the server license for Standard Edition remains at US$699 (estimated retail price) and Enterprise Edition remains at US$3,999. As before, the annual SA fee is 25% of original license cost. Note that when running Enterprise Edition in a cluster, all nodes require an Exchange Server 2007 EE license, even though some nodes will sit idle most of the time and only serve users in the event of a hardware or software failure on another node.

Exchange Server runs only on 64-bit hardware, which will result in additional costs for companies currently running Exchange Server 2003 on 32-bit hardware. Specifically, Exchange Server 2007 SE requires the Standard, Enterprise, or Datacenter Edition of Windows Server 2003 x64 or Windows Server 2003 R2 x64. Exchange Server 2007 EE requires the Enterprise or Datacenter Edition of Windows Server 2003 x64 or Windows Server 2003 R2 x64.

Client Access Licenses

Customers with SA on their existing Exchange 2003 CALs are entitled to the equivalent number of Exchange 2007 Standard CALs. The Standard CAL remains the same price as its Exchange Server 2003 counterpart: US$67 (estimated retail price) for the license and an annual fee of US$17 (25% of license cost) for SA. An alternative to buying the Exchange 2007 Standard CAL on its own is to purchase Microsoft's Core CAL Suite bundle, which includes both the license and SA for the Exchange Standard CAL. (This bundle also includes CALs for several other Microsoft server products.)

The estimated retail price for the Exchange 2007 Enterprise CAL is US$24 for the license and US$17 per year (approx. 70% of license cost) for SA. Microsoft justifies the higher than normal annual SA percentage with the fact that the Enterprise CAL contains a "service" component—that is, daily updated signature files for Forefront Security for Exchange or ongoing use of Exchange Hosted Services filtering at the Microsoft datacenter. The Exchange 2007 Enterprise CAL can also be purchased as part of Microsoft's new Enterprise CAL Suite bundle, which includes both the license and SA for the Exchange Standard CAL and Exchange Enterprise CAL. (This bundle also includes CALs for a much wider variety of products than the Core CAL Suite.)

Microsoft is currently offering special promotions for existing customers with SA active on their Exchange 2003 CALs, regardless of whether they purchased Exchange 2003 CALs on their own or as part of the Core CAL Suite. These customers can acquire Exchange 2007 Enterprise CALs without paying the upfront licensing fee—they only need to commit to paying the extra annual SA payments associated with the Enterprise CAL. For customers who purchased the Core CAL Suite in the past, Microsoft intends to introduce a special Core CAL Suite to Enterprise CAL Suite "step-up" offering. However, Microsoft hasn't indicated if or when any of these special promotions will terminate.

Although Exchange Server 2007 functions with older versions of Outlook, for users to get the full benefits of Exchange Server 2007, they need Outlook 2007. Unlike past versions, Exchange 2007 CALs don't include a license for Outlook. If customers have SA for their Exchange Standard CALs, they are automatically licensed for Outlook 2007 as long as their SA agreement is in effect. Otherwise, to use Outlook 2007 they will need to license it separately or as part of an Office 2007 suite.

External Connectors

With Exchange Server 2007, Microsoft continues to offer an External Connector license to cover scenarios where CALs are impractical. An External Connector permits an unlimited number of clients to access a particular server machine. Access via the External Connector license is limited to nonemployees of a company, such as business partners, suppliers, customers, retirees, and alumni.

As before, External Connector licenses can only be purchased through Microsoft's volume licensing programs, and each External Connector license costs approximately US$50,000. (SA costs an additional 25% per year.) Customers who have SA active on their existing Exchange 2003 Enterprise Connector are entitled to a no-cost upgrade.

The Exchange Server 2007 External Connector licenses only the Standard CAL feature set; Microsoft does not make the Enterprise CAL-specific features available via the External Connector.

Resources

Microsoft's portal for Exchange licensing and pricing information is www.microsoft.com/exchange/howtobuy/default.mspx.

Forefront Security for Exchange Server is described in "First Microsoft-Branded Antigen Products Ship" on page 11 of the Aug. 2006 issue of Update.

New features in Exchange Server 2007 are described in "Unified Communications Roadmap" on page 12 of the Nov. 2006 Update, "More Than Unified Messaging Coming to Exchange 2007 Users" on page 3 of the Dec. 2006 Update, "Exchange 2007 a Boon to IT" on page 3 of the Feb. 2007 Update, and www.microsoft.com/exchange/evaluation/default.mspx.

An explanation of Exchange Hosted Services is available in "FrontBridge Becomes Exchange Hosted Services" on page 7 of the May 2006 Update and www.microsoft.com/exchange/services/default.mspx.

The Intelligent Message Filter is described in detail at www.microsoft.com/technet/prodtechnol/exchange/downloads/2003/imf/default.mspx.

The introduction of Enterprise CALs, as well as the new Enterprise CAL Suite, are detailed in "Client Access Licenses Split Server Features" on page 3 of the Mar. 2006 Update and www.microsoft.com/calsuites/enterprise.mspx.