Hosted Exchange deployments will grow 4% in next four years.

Within the next four years the installed base of mailboxes for Microsoft Exchange Server is expected to grow at an annual clip of 12 percent, rising from 310 million this year to 470 million in 2014.

That’s the prediction of the Radicati Group, a market research firm based in Palo Alto, Calif, in a recent report released on the worldwide Exchange market.

The researchers looked at both on-premise and hosted deployments. Right now, though, on-premise deployments have the lion’s share of mailboxes around the globe. That won’t change much by mid decade. However, there will be a shift toward the cloud, as the on-premise approach slips from 76 percent of worldwide mailboxes to 72 percent of them.

The report divides the off-premise market into two segments. Hosted Exchange Maiboxes are cloud-based services offered by hosted email providers, including Microsoft with its Business Productivity Online Standard Suite. Managed Exchange Mailboxes are generally offered by large consulting and professional services organizations, such as HP, IBM Global Services and others. The Managed Exchange segment’s mailbox share will remain flat at nine percent through 2014, according to the report. The Hosted segment, though, will grow four percent from 2010 to 2014, to 19 percent from 15 percent.

Stoking the growth of hosted email will be an increased acceptance by organizations of software as a service solutions.

“Much of the new growth will come from the SMB [small business] sector, where customers are migrating away from on-premises solutions or upgrading from more basic hosted solutions based on POP mailboxes,” the report noted. “However, we expect that a substantial number of medium, large and even very large organizations will increasingly adopt a Hosted Exchange solution.”

That growth trend isn’t being ignored by Microsoft, which in recent weeks has been beating its chest about its intentions to be a major player in the nimbus. For example,  CEO Steve Balmer boasted that  Microsoft was “betting the company” on the cloud. About 70 percent of the software maker’s employees are working on cloud projects now, he revealed, and by year’s end that number is expected to reach 90 percent.

“Other companies have defined the cloud in a narrow, one-dimensional way,” he asserted. “Although these companies provide some interesting components, Microsoft is uniquely delivering on a wide range of cloud capabilities that bring increasingly more value to our customers.”

Meanwhile, in an interview with Windows IT Pro, Microsoft Corporate Vice President for Exchange Rajesh Jha was flogging the cloud as a boon for Exchange 2010.

“I feel that the cloud opens new opportunities for Exchange 2010,” he said. “If you think about Exchange market share, we are the leader in enterprise messaging. And in the small business space, I think with Exchange Online offering the full functionality of Exchange 2010,-the best Outlook experience, and consistent, seamless experience whether you’re in Outlook, the browser,-any browser,-any mobile phone,-that’s going to win out, and we will have the opportunity for our customers to actually be purely in the cloud hosted by us.”

“It’s a growth opportunity for Exchange,” he added. “We are very excited about moving to the cloud. There’s some speculation that we are somehow defensive about the cloud.-Far from it! We are very excited about what the cloud offers.”

“Firstly,” he continued, “for our large customers, they get the power of choice-software and service. And for our smaller customers, they might say, ‘Wow, I can get our entire IT infrastructure but get all the richness of Exchange, hosted by Microsoft and keep it ever-green and fresh.’ I think we get an opportunity to add share in the small and medium businesses.”

The Radicati report also predicted that Exchange Server 2010 usage will increase in the next four years, but it will do so slowly. “[U]ptake of Microsoft Exchange Server 2010 will be gradual, mainly due to the current cautious economic situation, as well as general organizational inertia in moving to new systems,” it said.

At the moment, Exchange 2007 is employed in 44 percent of on-premise deployments globally. By 2014, the report predicted that Exchange 2010 will surpass Exchange 2007 and have a hold on 57 percent of the server software’s deployment.

The fortunes of Microsoft Outlook 2007, now the leading email client in the market, will follow those of Exchange 2007, according to the report. “By 2014, the number of Microsoft Outlook 2007 seats will decrease due to the rollout of Microsoft Office 2010, set to be released in mid 2010, as part of the Microsoft Office 2010 productivity suite,” it forecasted.