Microsoft Readies Small Business Server Bundles

By Patricia Fusco | Posted August 29, 2003

Seeking to encourage small businesses to enter into the world of server-based computing, Microsoft plans to release an inexpensive bundle of its server system early in October. While small businesses will enjoy the ease-of-use and low introductory pricing, the cost of additional licenses could temper the product debut.

To date, small businesses have been slow to adopt server-based computing. According to researchers only 19 percent of the 22.9 million U.S. small businesses currently leverage server-based computing systems. However, 66 percent of the same small businesses use at least two or more PCs for day-to-day operations. With Microsoft poised to release its new Windows Small Business Server software bundles by mid-October, the Redmond, Wash. software giant is prepared to bridge this gap between those that do and do not compute.

This will be the fourth release in the five years that Microsoft has been making small-business server software. According to Katy Hunter, a group product manager for Microsoft, this time Redmond has put the right mix of value and technology together for small businesses.

"We feel we've really nailed the solution this time," Hunter said. "The Microsoft Small Business Server is ready to be a mainstream computing solution."

Standard or Premium?
Microsoft will be selling two editions of its Windows Server 2003 software. The Windows Small Business Server 2003 Standard Edition consists of Windows Server 2003 and Exchange Server 2003 technology. That's enough computing power to set up e-mail and core data applications for the average small business.

The Standard Edition also includes SharePoint technologies, so online collaboration between employees in dispersed geographic locations is an option. The base price of this software bundle will be $599 and can connect up to five PCs or users.

The Windows Small Business Server 2003 Premium Edition adds Microsoft's SQL Server database and Internet Security and Acceleration (ISA) Server software to the mix. The Premium Edition is designed for small businesses with more demanding IT needs, such as data-intensive line-of-business applications. Pricing starts at $1,499 for a five-user license.

However, with both editions, Microsoft is raising the license fee for each computer or person with access to the software, after the first five. Known as client access licenses (CAL), prices will increase from $60 to $99 per user. Consequently, a small business that buys 25 additional client licenses to hookup a 30-employee shop will pay about $975 more in licensing fees for the 2003 server-software than they would with Microsoft's current Small Business Server lineup.

Pressure or Price?
While most small businesses are highly cost-conscious, Microsoft contends that it's not the price of server-based computing that inhibits many them from adopting the technology. Hunter said pressure to increase productivity is the primary reason why a small business opts to implement a server-based computing system.

"Small businesses are drowning in information that's held in a lot of different places and not always in a digital format," Hunter said. "They still rely heavily on paper-based processing. A lot of small businesses know they need to get their data together, and they also know they need a secure place to put it. Increasing employee productivity through server-based computing is the best available option."

Hunter said the company has gotten to know its small business customers. Consequently, Microsoft retooled its small business server lineup to address specific concerns.

"It takes about 15-minutes to complete the initial configuration of the server," Hunter said. "Security updates are automatic — the first time the server connects to the Internet new updates and fixes will be downloaded and installed — unless the system is configured otherwise. Firewalls are enabled at the startup and backup functions are in place so My Document folders are redirected from client computers and stored on the company's SharePoint site. It's a complete, secure small-business solution"

Time and Money?
Key Mechanical is just the type of small business that Microsoft's Small Business Server was designed for. Frank Leonard said the Kent, Wash.-based small business beta-tested the Premier Edition of the software, which had and immediate impact on the heating and cooling company.

"It took only one Saturday and then a bit of follow up on Monday to get up and running," Leonard said. "It took very little effort on our part, but our business has seen a great impact on communications between three offices — Seattle, Portland and San Francisco — due to the use of Share Point. In our day-to-day operations the implementation of SBS has eliminated the system crashes we used to experience under the Windows Terminal Server and Novell systems we used prior."

Although small businesses that adopt server technology often reap significant benefits and a quick return on their investments, many fear that system upkeep could break the bank. Hunter said Microsoft went to great lengths to keep the installation of its small business server systems simple and ongoing management as easy as possible.

"We expect our customers response to the Small Business Server bundles will be similar to the old days of PC computing," Hunter explained. "When Windows moved to Windows 95, PC uptake really took off. We expect our Small Business Server 2003 offerings to do the same for server-based computing as Windows 95 did for the PC."

The Bottom Line
Microsoft said it expects the lower-priced bundles to pave the way for computer makers such as Hewlett-Packard and Dell to sell a software and hardware bundle for under $1,000. As for the increase in license fees, Hunter said it was necessary for Microsoft to be able to offer the $599 starter package, which represents the company's lowest-cost server-based system available to small businesses.

Do you have a comment or question about this article or other small business topics in general? Speak out in the SmallBusinessComputing.com Forums. Join the discussion today!

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