Microsoft has long been known for its complete line of enterprise-class software, all of which is interoperable to varying degrees and requires a certain level of expertise to be used effectively. In recent years, Microsoft has also tackled the small-business market, primarily through Small Business Server (SBS), which combines several business products with unique management tools designed for that market. Until recently, however, Microsoft had virtually ignored the market for midsized businesses. Now, with its Windows Server System for midsized businesses promotion, the company finally has a compelling product bundle nicely positioned between SBS and its high-end enterprise offerings.
Recognizing Opportunity
According to Microsoft, midsized businesses typically employ from 25 to 500 connected PCs and maintain a small staff of IT generalists. The mid-market uses the largest percentage of legacy software—especially Windows NT 4.0, Microsoft Exchange Server 5.5, and Novell NetWare 4.x—and as a result has to deal with many user support problems, server crashes and reboots, and the like. Consequently, the IT staff spends most of its time reacting to problems with the existing infrastructure and little time planning for or deploying software upgrades that might ease those problems. These businesses don't need the hand-holding provided by SBS 2003, yet don't have the depth of technical expertise found in most enterprises.
However, the midsized business market is growing at an annual rate of 12 percent—faster than both the small-business and enterprise segments. Thus, the mid-market is a huge opportunity for Microsoft and its partners. And Microsoft isn't known for leaving money on the table.
Tackling the Mid-Market
To address the needs of the mid-market, in July Microsoft announced a new licensing offering. The Windows Server System for midsized businesses promotion bundles three copies of Windows Server 2003, Standard Edition; one copy of Exchange Server 2003; one copy of Microsoft Operations Manager (MOM) 2005 Workgroup Edition (which is limited to 10 servers); and 50 CALs for both Windows Server and Exchange. The package is sold through the Microsoft Open License program for approximately $6400 in the United States, or about 20 percent off the combined price of the separately purchased products. Additionally, Microsoft has created a new type of CAL, which combines Windows Server and Exchange CALs into a single unit that also sells for about a 20 percent discount ($76 in the US, a $19 savings per CAL). Customers can purchase up to 250 of these CALs.
The new license falls neatly between SBS 2003's 75 CAL limit and Microsoft's enterprise licensing, which generally starts at 250 CALs. But the new bundle is less limiting than SBS 2003 as companies grow. For example, businesses that run into the 250 CAL limit can simply switch over to Microsoft's enterprise licensing scheme; because the bundled products are the same ones that enterprises typically use, customers don't face the same in-place upgrade problems that plague SBS users.
Pricing is one thing, but businesses that run legacy products often complain that, because of product interdependencies, there's no obvious place to start an upgrade. In a business that still runs a mix of NT 4.0 and Windows 2000 servers and uses Exchange 5.5, for example, it's unclear which new software to deploy first. Understanding how the various Microsoft server products can benefit a business and how they interoperate is also confusing. Like a deer in the headlights, mid-market businesses know they'd benefit from moving on but are frozen in place.
To address this problem, a new TechNet Web site called the Midsize Business IT Center (http://www.microsoft.com/technet/itsolutions/midsizebusiness/default.mspx) provides a complete set of documentation aimed at midsized companies' IT staff. The documentation includes prescriptive guidance, technical information, and resources to help people plan for, deploy, and manage Microsoft server products in their environments.
The Windows Server System for midsized businesses will likely prove to be a boon for Microsoft partners as well. Thanks to MOM 2005's remote monitoring tools, services-based Microsoft partners will be able to expand their offerings to include remote network management services for midsized businesses. It will be interesting to see how this market evolves over the next year, but my guess is that Microsoft partners will see huge gains.
Early Adopters Cite Benefits
According to Microsoft, early adopters have already seen a 30–40 percent reduction in the amount of time IT staff needs to respond to problems, freeing time for more proactive work. And the modern software products in the new bundle reduce downtime by a whopping 75 percent compared with NT 4.0–based servers. With increased uptime and user satisfaction, administrators can be more productive. "Today, medium-sized customers are content but enduring lots of pain with server patching, rebooting, and downtime," Steven VanRoekel, director of mid-market solutions for Microsoft's Window Server Group told me. "The bottom line is that these customers are not expecting enough from IT, and IT is not viewed as moving from a cost center to a company asset. They should expect more from their systems."
Recommendations
Although Windows Server System for midsized businesses doesn't include the amazing management tools that Microsoft provides with SBS 2003, it does fit well between SBS and the company's enterprise server products and provides midsized businesses with a new package that's compelling and proven. What would make the bundle even better, of course, is software tools that implement the guidance that Microsoft now makes available separately, in the same manner as the Security Configuration Wizard (SCW) in Windows 2003 SP1. That, I'm sure, will come in the future. But for businesses that are stuck in the technological quagmire of NT 4.0 and Exchange 5.5, Windows Server System for midsized businesses is both full-featured and well priced. My advice to those businesses is to closely evaluate this new offering with an eye on the benefits it can provide.
