Office 365 vs Hosted Exchange: How These Email Products Compare

By: Clay Ostlund
February 6, 2015

office_365_vs_hosted_exchangeFor most of the time that we have had computers, the general technology landscape has been dominated by servers located inside the office. Those servers powered the services we needed to make email communications hum and provided employees access to the software and programs necessary to remain productive. In today’s terminology, those servers are considered on-premise Microsoft Exchange. 

With the rise of cloud computing in the modern world, there is a great debate raging between IT professionals about which email service is better for business. Is Office 365 a fad, or the wave of the future? What about hosted exchange servers. Has their day come and gone already? The best way to make a decision between the two options is to compare the services offered by each. 

Office 365 vs Hosted Exchange: Price

Money cannot always be the sole determinant when it comes to making business decisions. Sometimes the decision to spend less money, simply for the sake of saving money, results in inferior services and downtime that can impact business productivity. However, cost does impact your business’s bottom line and should be given proper consideration. 

The simple fact of the matter is that a hosted exchange cannot compete with the prices of Office 365. Look at the comparison below:

  • Office 365: Mailbox size – 50GB, ActiveSync support, Mobile Device support, 24/7 phone support, and HIPAA/FISMA security, SPAM Filtering all for $4/month per user (or $48/year per user)
  • Average hosted exchange: Mailbox size – 25GB,  ActiveSync support and 24/7 phone support, but NO BlackBerry support or HIPAA/FISMA security, for $12.95/month per user (or $155.40/year per user)

The price point mentioned above for hosted exchanges represents the average cost for the competition, but even when the closest competitor is compared, Office 365 is still less than half the cost per month. Knowing what options are available to satisfy your business needs will also help ensure you're not over-paying.

Office 365 vs Hosted Exchange: ActiveSync

Without question, one the greatest benefits of any cloud-based service is the ability to synchronize data, email and documentation across numerous devices. Employees and businesses want to have access to company information regardless of location. If your employees can work on documents at their workstation, give client presentations off-site on a tablet, and stay in touch via email on a smartphone, then your business is humming along at an incredibly productive pace. 

ActiveSync technology supports that synchronization across multiple devices. The vast majority of hosted exchanges offer this synchronization, but Office 365 has them all beat in one area: BlackBerry support. Office 365 supports BlackBerry email, calendars and contacts right out of the box, at no extra fee. Most hosted exchanges offer no such support without extra fees. These fees range from $2.99/month per user to $10/month per user. While that might not seem like a big deal, a company that has even 25 employees with a BlackBerry device is going to face significantly higher costs for that additional support. 

With that being said, if you require BlackBerry support, Office 365 would be your best option. However, most business professionals have migrated to Android, iOS and Windows mobile devices; if this is the case in your business, both options are equally qualified to suit your needs.

Office 365 vs Hosted Exchange: HIPAA and FISMA

When it comes to security, Office 365 beats the competition. This isn’t to say that various hosted exchanges are not secure, but rather that Office 365 has a more robust suite of security credentials and features. Office 365 is the only service that offers both HIPAA and FISMA (Federal Information Security Management Act) credentials to users. 

Going beyond security and credentials for US companies, Office 365 is the only service to include all of the following in its programs:

  • EU Safe Harbor Compliant
  • EU Model Clauses Capable
  • SSAE 16 Certified
  • ISA 27001 Certified  

Again, the idea here isn’t to suggest that hosted exchange options are not secure. Instead, it is worth highlighting the fact that while competitors offer varying levels of security and certain credentials, Office 365 offers ALL of the credentials mentioned above. 

Office 365 vs Hosted Exchange: Extras

Last but not least, let’s compare extra features available, such as archiving capabilities, Microsoft Office web apps, SharePoint proficiency and other features. Office 365 offers the most flexible suite of additional features of any service out there. 

Office 365 offers users the following, all for a lower price than competing hosted exchanges:

  • Legal archiving capabilities
  • Lync capability
  • Access to Office web apps
  • SharePoint capability
  • Active Directory Federation
  • Desktop MS Office rights 

There is one notable exception. RackSpace hosted exchanges provide legal archiving at a lower price than Office 365, but the service lacks Lync capability, Office web apps and Active Directory Federation. 

The message here is that Office 365 is simply more flexible. Office 365 does offer the greatest features, security and flexibility for the price. 


If Office 365 was perfect for every company, this post would be irrelevant. The truth is that each company needs to compare these features and services individually to determine the value of each option. Determining the features you need will help you decide which suits your needs best. For more technology tips and answers to questions, download our free eBook.

Topics: Business IT Services