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Windows Small Business Server RTMs

Microsoft hit the key development milestone for the final piece in its six-month-long rollout of Windows Server 2003 on Tuesday with the release to manufacturing of Windows Small Business Server 2003.

Release to manufacturing means developers are finished with the code and the software is being sent to factories and prepared for posting at download sites. The fourth-generation version of Small Business Server is formally scheduled to be launched the week of Oct. 9 at Microsoft's partner conference in New Orleans.

From a marketing perspective, Microsoft made three significant changes to Small Business Server for the 2003 version: it split the product into two editions, made the lower-end version much less expensive compared to the 2000 generation, and beefed up the size of company that can use the product.

Windows Small Business Server 2003 now comes in both a Premium and a Standard edition. The Premium Edition includes Windows Server 2003, Exchange Server 2003, ISA Server, SQL Server 2000 and Microsoft Office FrontPage 2003. The Standard Edition will not include the database, firewall or Web-authoring products.

Small Business Server Standard and Premium edition are the ninth and tenth editions of Windows Server 2003 to arrive this year. The first six editions of Windows Server 2003 became generally available on April 24. They were the Standard Edition, the 32-bit and 64-bit Enterprise editions, the 32-bit and 64-bit Datacenter editions and the Web Edition. Last week, Microsoft launched a standard and enterprise edition of Windows Storage Server 2003.

Pricing for the Premium Edition of Windows Small Business Server 2003 holds steady from Windows 2000 Small Business Server at $1,499 with 5 Client Access Licenses (CALs). Microsoft has a dramatically lower price point for the Standard Edition -- $599 with 5 CALs. Several major hardware vendors plan to roll out complete hardware and software packages based on Windows Small Business Server 2003 for $1,000, Microsoft officials have said. The price of additional CALs for all editions, however, has increased by 65 percent from $60 to $99 each.

Katy Hunter, a Microsoft group product manager for Windows Server, said Microsoft pushed down the entry price of Small Business Server to make the package an option for very small businesses. Organizations with fewer than 10 people represent a huge market opportunity worldwide. In the United States, Hunter said that Microsoft's research shows that roughly 10 percent of businesses of that size have a server in place.

"What we're looking to do in general with Small Business Server is to really make the value of server computing accessible to the masses of small business," Hunter said. "They need [a server]. These businesses do have several PCs. They do have applications that they're sharing. They have a great deal of data that they need to secure, control and back up."

At the same time, Microsoft appears to have decided that outside of the very smallest engagements, it can get customers to pay more for additional CALs. Hunter maintains that the newly higher CAL price provides a smoother transition when customers outgrow Small Business Server, and that the $99 CAL is still a bargain compared with the cost of maintaining Microsoft CALs outside of the Small Business Server environment.

As customers graduated from Small Business Server to individually licensing Windows Server, SQL Server and Exchange Server they hit a large increase in cost. "What we found is that somebody is going from [paying] slightly more than $50 per cal, and now with SQL Server, [the customer is] well over $200 per client," Hunter said. "Ninety-nine dollars is still a great deal on that CAL when you look at Windows and Exchange and SQL Server or even just Windows and Exchange."

One obstacle to Small Business Server sales in the past has been the limitation of support to networks with 50 PCs or fewer. In the 2003 version, that limit is raised to 75 computers for both the Standard and Premium editions.

"The product is still targeted to a network that has 50 or fewer PCs," Hunter said. "[But] you don't really get a lot of customers with 40 PCs that feel comfortable [buying the product] with [that] limit. We wanted to give [customers] some headroom." Along the same lines, the product features upgrade options that allow customers to release the software constraints on Small Business Server and use the underlying technology in full-featured mode. In that scenario, a customer would pay the cost of Windows Server 2003 Standard Edition and Exchange Server 2003 Standard Edition minus the cost of Small Business Server 2003. "We completely grant you credit as you grow," Hunter said.

The ease-of-installation, simplicity and integration of Small Business Server are targeted at small businesses either without IT support or with one- or two-person IT departments, but many of the features are also aimed at the channel. Microsoft sees consultants and services firms as a major way to drive market adoption of SBS -- as shown by the planned formal launch of the product at the partner event next month.

Microsoft has added partner-friendly aspects to some of the ease-of-installation features of Windows Small Business Server 2003. One example is work to make it simple to set up remote access to Exchange through Outlook Web Access, to the company intranet remotely or to individual PCs via remote desktop technology. At the same time, Microsoft made it possible for IT consultants to use the same interfaces to log on remotely as an administrator and remotely monitor the system or set up monitoring and reporting. "We see channel partners building a services business on that," Hunter said.

Harry Brelsford, who has written books about Windows Small Business Server and who runs an SMB-focused consulting practice in the Seattle area, says the product amounts to "a consulting practice in a box." Because the setup time is much shorter and simpler and the product is more stable than in pre-Windows 2000 generations, it will allow consultants to create value-add businesses and offer predictable prices for set-up services. "I can go back to fixed-bid pricing. I can go to the law firm and say, we're going to set up your network for $3,000."

Brelsford believes Microsoft has improved Windows Small Business Server 2003 enough to give it a real opportunity to mend fences with its partner community. "What we have in the SMB segment, and the SBS community in particular, is some left-over hard feelings related to SBS NT.x. A lot of U.S.-based consultants never gave the product another chance."

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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