Optimizing the cost of your migration to Exchange 2000

Although planning for the implementation of Microsoft Exchange 2000 is a fairly straightforward process, knowing your options and requirements can significantly cut your costs. We'll give you some tips on optimizing the cost efficiency of deployment.

A recent TechRepublic poll indicated that two-thirds of respondents are already planning their implementation of Microsoft Exchange 2000 or are considering doing so. If yours is one of those organizations, this article will tell you about the licensing requirements and pricing structure involved in upgrading to Exchange. I’ll also provide an example company to further detail an Exchange implementation.

Server license requirements
Exchange 2000 Server requires a license for every server, including every member in a clustered environment. Since Exchange 5.5 imposes the same licensing rules, migrating server licenses in your organization to Exchange 2000 can be as simple as buying an upgrade for each server running Exchange Server 5.5—a scenario most likely in smaller, less complex Exchange organizations.

Larger environments may take advantage of the enhanced hardware scalability found in Exchange 2000 Enterprise Server. Features such as IS partitioning can reduce the number of servers (and therefore, the number of server licenses) needed to support an organization’s mailboxes. The amount of initial savings gained by consolidating servers depends on how many servers you can eliminate with this approach. Because Exchange 2000 Enterprise Server is more than twice as expensive as the standard Exchange 2000 Server, you will spend more for licensing initially in some situations. However, eliminating the cost of one or more servers may more than offset the additional cost of licensing. With fewer servers to administer, Total Cost of Ownership (TCO) should go down as well.

Be aware, however, that server consolidation isn’t the only reason your organization may benefit from upgrading your edition of Exchange. While the Standard and Enterprise editions of Exchange Server 2000 are similar in capabilities to their 5.5 counterparts, a new flavor of Exchange 2000—Conferencing Server—also offers online conferencing capabilities.

Client licensing requirements
Like its predecessor, Exchange 2000 Server implements per-seat licensing for client access. This means Exchange 2000 Server requires a Client Access License (CAL) for each client that authenticates to gain access to resources on the server. Access to e-mail or the use of collaboration features on the Exchange server, for example, requires authentication (and therefore, a CAL). A CAL is legally required regardless of the client software used for authenticated access (Outlook Web Access, Outlook 98/2000, Outlook Express, etc.). Anonymous access, however, such as accessing public folders via a Web browser, does not require a CAL. Exchange CALs work with all three versions of Exchange 2000 Server, and a client with a CAL can access any number of Exchange servers.

While the logic behind CALs may seem a bit complex, calculating the necessary number of upgrade CALs couldn’t be easier. Exchange 2000 uses the same client-licensing scheme as Exchange 5.5, so since you should already know how many seats you support, you’ll know the number of CALs you need to upgrade from Exchange 5.5 to Exchange 2000.

Exchange pricing structure
Table A displays the pricing matrix for Exchange 2000 software and licensing purchased under an entry-level volume agreement. Please note that all prices are for products purchased in the United States, in U.S. dollars.
Table A
Exchange 2000 product line
Version upgrade
Competitive upgrade

Exchange 2000 CAL
(Client Access License)


Exchange 2000 Server
(without CALs)

Exchange 2000 Server with five CALs
Not available
Exchange 2000 Enterprise Server (without CALs)

Exchange 2000 Enterprise Server with 25 CALs

Not available
Exchange 2000 Conferencing Server (without CALs)
Not available
Not available
Exchange 2000 pricing

You must purchase a product upgrade if you wish to upgrade both the version and the edition of Exchange. For example, if your business wants to upgrade from Exchange 5.5 Standard to Exchange 2000 Enterprise Server, you need to purchase a product upgrade. Since product upgrades are less expensive than purchasing new licensing, you get some credit for your older product.

Volume agreements
Microsoft offers discounts for volume purchases, which can significantly reduce costs. For example, companies that purchased CALs through an Enterprise agreement receive free CAL upgrades. Other volume purchasing arrangements are also available. Microsoft sets estimated prices for licenses purchased under the various volume programs, but not the final price. These programs are administered through Microsoft Large Account Resellers, and the reseller determines the prices you pay. If you are unsure what purchasing agreement your company has or want to inquire about volume agreements, contact your local Microsoft sales office.

Other software and licensing requirements
Exchange 2000 Server requires a Windows 2000 CAL for each client that authenticates. Again, this requirement is unchanged from Exchange 5.5. You’ll likely need these CALs anyway for other things such as file and print services, so it shouldn’t be an additional cost.

Another possible cost is upgrading third-party software or connectors that use Exchange, such as fax-server software. Your existing versions may require an upgrade to operate with Exchange 2000 Server.

Example: XYZ Corporation
XYZ Corporation is migrating their Exchange 5.5 environment to Exchange Server 2000. During the design of their Exchange organization’s topology, they decide to reduce the number of servers by taking advantage of the better hardware scalability of Exchange 2000. One of their sites reduces the number of servers from three to one by purchasing a product upgrade from Exchange 5.5 Server Standard to Exchange 2000 Enterprise Server. Another site wants conferencing capabilities, so they purchase Exchange 2000 Conference Server in addition to upgrading their existing Exchange 5.5 Server Standard. The remainder of their sites continues to use the same number of servers (two) with the same editions of Exchange (one Enterprise, one Standard).

XYZ owns 400 Exchange 5.5 CALs, which they upgrade to Exchange 2000 CALs. They also anticipate adding 25 new employees by the time the implementation is complete, so they purchase 25 additional Exchange 2000 licenses. Table B reflects the licensing costs of this migration using entry-level, volume pricing.
Table B
Exchange 2000 product line
Number required
Cost each

Exchange 2000 CAL (Client Access License) Standard


Exchange 2000 CAL Version Upgrade

Exchange 2000 Server (without CALs) Version Upgrade
Exchange 2000 Enterprise Server (without CALs) Version Upgrade
Exchange 2000 Conferencing Server (without CALs) Standard
XYZ Corporation Exchange 2000 migration costs

What’s your story?
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