Microsoft Unwraps Small Biz Server 2003

Microsoft launched its new effort to capture opportunities in the small and medium business (SMB) market with the release of Small Business Server 2003.

Microsoft unveiled the product Thursday at its annual partner conference in New Orleans. The product, a version of its Windows Server 2003 operating system that tightly integrates a number of other technologies useful for the small business, is a keystone in Microsoft’s effort to capture the SMB market, which it considers one of the last open frontiers of the software market.

At its Financial Analyst Day in July, Microsoft told analysts that it plans to invest $2 billion in the space to capture the opportunity. Orlando Ayala, the new senior vice president of the Small and Midmarket Solutions & Partner Group within Microsoft’s Business Solutions Business Group, told analysts that the SMB market, which it defines as businesses with 1,000 or less employees, has about 45 million customers. Moreover, it is a highly fragmented market in which the top nine vendors only own about 30 percent of the space.

Ayala said that is a prime opportunity for Microsoft to take a defining lead by giving these businesses solutions that provide broad automation and insight that is currently only available to large global enterprises.

“There is no reason why these customers should not be able to operate as a global enterprise,” he said at the time. “No reason they can’t get to the supply chain.” He added, “It’s a broad set of customers. Our target would be 40 million customers that should be able to benefit from this value.”

Joe Wilcox, analyst with Jupiter Research (which is owned by the same company as this Web site), said that Microsoft is right about the opportunity.

“According to our data, in the U.S., only 51 percent of SMBs (businesses with fewer than 1,000 employees) have a server OS,” he said. “In the largest segment of the market (businesses with 10 or less employees), only 34 percent have a server OS.”

Wilcox noted that messaging solutions are even more scarce in the SMB space. Overall 39 percent have messaging software, like Exchange Server. In businesses with 10 or less employees, only 25 percent have messaging software.

“The market is very under-automated in these technology areas that are benefiting larger enterprises,” Wilcox said. “Rather than having online calendaring and email and contacts, the business process at many of these smaller operations are sticky notes and fax machines.”

Enter Small Business Server 2003, a server operating system which combines Windows Server 2003 with Exchange 2003, SharePoint Services, Remote Web Workplace, VPN, remote monitoring and control, security features, preconfigured management consoles, firewall, backup and restore capabilities, Active Directory, software restriction policies, and Client Setup features/wizards. All starting at $599 for the Standard Edition (which includes 5 Client Access Licenses).

The Premium Edition — which adds ISA Server, SQL Server and an edition of BizTalk Server 2004 to the mix — goes for $1,499, including 5 CALs. SBS 2003 installations are limited to a maximum of 75 users and are single-server installations only; they cannot be linked together. Additional CALs go for $99.

“You’re getting a lot in the box for the price, versus what you’d have to pay ala cart,” Wilcox said. He added, “If you look at what some OEMs are offering, it means a small business could buy an integrated server suite with all new hardware for under $1,000.”

In addition to integrating many of its key products together at a low price point, Microsoft has also focused on making it quick to install and easy to maintain, even for firms without dedicated IT staff.

“We’ve installed and upgraded lots of older versions of Small Business Server, so we planned for as much as a week for installation,” said Marc Harrison, who handles technology for W&E Baum, a family business of about 20 people specializing in the production of donor walls, trees of life, awards and plaques. “We were thrilled when we came in on Sunday and had everything up and running in three hours. the company was open for business on Monday.”

Adapted from

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