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The momentum around cloud services continues to build, though a number of Fortune 500 companies have been slow to adopt the public cloud due to questions around loss of data control and security issues. The Windows Azure Services platform, released in 2010, is Microsoft’s (News - Alert) flagship cloud-based product and MS is betting on the new platform to increase the number of enterprise-level converts to the cloud.

That said, it’s hard to talk about Microsoft communications without mentioning the key position that the Exchange Server occupies. Back when Exchange Server 2007 was first released, Microsoft faced the challenge of a new messaging model. The growth of cloud-based email hosting, most notably Google (News - Alert) Gmail, was changing how people and businesses connected. The next version, Exchange Server 2010, provided welcome improvements to some of the shortfalls of the previous version.

Recently, in an effort to drive some debate about where the IT industry is going, Roger McNamee, managing director and co-founder of Elevation Partners, offered an interesting presentation called “10 Hypotheses for Technology Investing.” The presentation highlights views on the impact of mobile devices; the effect of these changes on Google and email hosting; the possible results of Apple’s (News - Alert) closed-wall model on Internet vitality; and the disruption that has resulted from iPads (the first successful tablet) and what this means for other players.

In particular, he pays close attention to Microsoft. Of course, Microsoft is releasing major and minor updates all the time on many fronts. The general consensus is that the company is also moving on every front to lure enterprises, SMBs, and users to the cloud. Company leaders believe they have seen the future, and they have named it global interconnectivity.

With that in mind, Microsoft has actively promoted the idea of companies moving to a hybrid on-premise/cloud infrastructure. This way they can entice organizations to experience the computing freedom of the cloud, while maintaining a sense of security and equilibrium with dedicated servers. However, McNamee believes Windows is vanishing, slowly but surely, as its share is gobbled up by Android (News - Alert), Chrome, and Apple devices.

McNamee says that “Microsoft can shift the model to leverage the Exchange monopoly” and that this tactic will drive growth in profits for five years. Microsoft released Exchange Server 2010 while simultaneously introducing Exchange Online, its cloud-based messaging service. Inclusion of the Outlook Web Access Webmail Client with its email hosting offered a vast improvement over previous versions. Microsoft’s current upgrade of their collaboration platform, SharePoint, now provides quite a range of cloud-related and enterprise-friendly features. SharePoint 2010 was released this year with much fanfare and the company successfully updated a number of features without overdoing it. All this is to point out that MS still has a lot of arrows in its quiver.

For example, would companies have invested in SharePoint if they weren’t already running Exchange (or SQL)? Would Office be as in dominant a position on the desktop if Outlook and Exchange didn’t work together so smoothly? Users can acknowledge that there have been times when the Office and Exchange development groups have seemed to be in open warfare with each other, much to the bemusement of external observers.

This is to say that Exchange is the de facto standard for email for the business world and has a large share in other markets. The days of massive migration away from other email systems to Exchange are probably gone, if only because the traditional targets such as Novell (News - Alert) GroupWise and Lotus Notes are in decline. New competitors do take market share, as in the case of Gmail, but usually in markets where Exchange is not dominant, like education. In addition, Microsoft has other products.

In 2010, Microsoft introduced the subscription service Office 365 as a beta version. Office 365, formerly named Business Productivity Online Suite (BPOS), is an online suite of applications that includes Exchange, SharePoint, Office Live Meeting, and Lync Server in one cloud-based offering. For Microsoft, Office 365 represents a means for reaching enterprises and SMBs alike on the computing advantages of working in the cloud. The test for Microsoft will be to prove that a subscription service represents a true value for customers. The company will also need to develop flawless integration between the applications to keep administrators from looking elsewhere for admin solutions.