How much for Exchange for 500-800 users?

There's no way you'd need that scale of a system for a few hundred accounts. I'd check around on some independent quotes to get an idea of what you should be looking for. I'm thinking your biggest problem to solve is disk space, but that could be remedied with a decent SAN. Exchange's biggest advantage is the "office" part; tasks, appointments, etc that are shared among users. Unless this is something you really need, I'd look at revamping your current mail server system. What sucks about it? Chances are, you could build on that a little more to bring it up to what will work for you MUCH cheaper and maybe easier than dumping it and going to Exchange.

You shouldnt buy exchange just for email. Lost of things do email. Exchange's big benefit is calendaring, meetings, etc. Do you know the requirements of this project? Is it soley for email?

Exchange (and all its features besides mail) is best if everyone's using Outlook at the desktop end - making it even more expensive. If you've already got several sysadmins with the skills to build/maintain a linux mailserver at that scale, have them take a look at http://www.zimbra.com/. . It has a lot of the features that Exchange can offer, but at less cost. If you just want mail and don't need support (due to having in-house expertise), then you might be able to get away with the open-source (=FREE) version.

2nding everything chrisfromthelc said. I don't understand where people even get the "We must have an Exchange server!" idea from. As chris says, there's lots of stuff Exchange can do, but most of it's proprietary stuff connected to other Microsoft products, which I rarely see companies really using. There are just tons of open source and commercial email solutions out there - this is basically the oldest and most mature application domain on the internet. It ought to cost a small fraction of the budget you're talking about to rig up and thoroughly test a variety of alternatives to your current system. I personally like the Apache project's http://james.apache.org/ server, which in addition to a solid and elegant overall design has sophisticated facilities for mail processing and re-sending. But unfortunately it doesn't do IMAP yet.

duh, didn't check my own link: http://www.zimbra.com/products/screenshots.html

damn dirty ape is right. If you just need basic email with no shared calendars, out of office assistant, etc... use vpop3. http://www.pscs.co.uk/products/vpop3/

MSFT's http://www.microsoft.com/exchange/evaluation/compare/default.mspx has some TCO articles. Other links show that a a single Microsoft Exchange server supports an average of 232 users. So you're looking at a max of 4-5 servers. I'm not sure where the 100k for hardware came from.

There's IT strategy and support companies that do these installations for a living. Give them a ring, tell them the number of users Exchange will be supporting, what features you want, and what hardware you currently have and they can spec out a whole hardware, software, and implementation bundle in a day or two. And it should cost nowhere near what your admin is budgeting. I don't know where you are but if you're in San Francisco, send me a message and I'll give you the name and number of the outfit that rolled out ours. Even if you don't go with them, at least you'll have a reasonable ballpark.

Seconding Zimbra.