If you work in an SME workplace there is a big chance that you are working on a hosted exchange or web-mail powered email hosting solution. In short, email hosting is an outsourced subscription of an entire email infrastructure; you pay a monthly/annual fee to have the email services looked after for you.

Most SMEs usually don’t have the time, a large IT budget or technical staff to implement and maintain an entire email system infrastructure. Other factors such as costs are usually the main reasons why Hosted Exchange or web-mail email hosting are becoming more and more popular. Hosted Exchange is also called exchange hosting, usually running on a Microsoft Exchange server. With email hosting you get peace of mind that your email system is always secure, backed up and up and running. It also comes with high reliability and performance plus administration and support. The main difference between Hosted Exchange and web-mail email hosting is that 1) Web-Mail is a budget version and 2) with web-mail you use only your web browser to send, receive and review.

Hosted Exchange
Hosted Exchange is based on Microsoft’s latest Exchange server with Microsoft outlook as your client. With Outlook you can do more than send and receive email, you can share calendars, folders and contacts. Outlook is available for desktop, browser and mobile access so you are always connected, whether you are in the office, on the road or working at home. You always connect to the same Exchange server; therefore your inbox always stays synched in near-real time, no matter which Outlook client you are using.

In a Hosted Exchange environment, the hosting provider owns and is responsible for the data centre, network, devices, operating system and application infrastructure components. In short, they are responsible for providing a stable operating environment for every application used. Your own IT organisation manages the applications and maintains full control over the applications infrastructure and business process.
With in-house email servers you need to provide maintenance and have anti-virus subscription and security update upgrades. You’ll need to purchase a new server every 5 years and you will have slow access from outside of the office. You also need to invest in server hardware, server software licensing, Exchange enterprise software and Blackberry server software. Finally you’ll need to hire a consultant to install software and perform maintenance/upgrades.

Having a Hosted Exchange solution mean you don’t have to pay through the nose for expensive in-house servers, software licenses, employing IT staff to install and maintain the infrastructure, or being responsible for a 24/7 infrastructure.

Web-mail
Web-mail gives you “anywhere , anytime”, emails, calendars, contacts and task lists. It’s intended to be as powerful as a desktop client, such as Outlook. The only limitation is that you need is a web browser and an internet connection. You can access email from outlook, BlackBerry, Web-mail, or any other email client or wireless device with absolutely no maintenance on your end.
Web-mail email hosting is a budget email hosting solution, but nonetheless it delivers great functionality for small businesses. A Web-mail service takes away complexities of installing and maintaining an in-house email solution and at the same time offers the latest anti-spam, anti-virus and security technologies.
Web-mail is an email solution that is perfect for businesses that have somewhat limited in-house budgets for IT expenses, limited IT resources to support an email environment and  businesses that need the latest spam and virus protection.

Hosted Exchange or Webmail – What’s best for you?
The obvious difference between Hosted Exchange and Web-mail email hosting is, as mentioned, the requirement to have an internet connection and access to a web browser for Web-mail email hosting. But what are the other main differences? Below is a brief explanation of what the differences are - in terms of ability to share contacts, tasks and calendar - between Hosted Exchange and Web-mail email hosting.

Share contacts:
Shared contacts are usually available with the hosted exchange option. Other users can be granted access to edit your contacts. Usually there is no ability for shared contacts with the Web-mail option. Other users cannot have access to edit your contacts.

Share tasks
You can usually share tasks among users with Hosted Exchange. You have the ability to assign a task to other users. You can select the users you want to invite and automatically see the best times to meet. Collaboration with tasks among users is usually not available with the Web-mail option. You cannot assign a task to someone else and you have to manually find everyone’s schedule before you agree to set up a meeting.

Share calendar
Exchange usually allows you to delegate read/write capabilities with the Hosted Exchange option, i.e. you can have an assistant create events for you. Events can have different statuses and colours on your calendar (i.e. out of office, on holiday, business etc.). No delegation capabilities can be given to other users with the Web-mail option, so your assistant cannot create events for you. Only read access can be given. Categories of events are not available (personal, out of office, on holiday etc.) and all calendar events are displayed in the same colour.

Official Microsoft Exchange Site - Email Hosting