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Microsoft Makes its First Midmarket Move

Midsized businesses are a curious lot. They're not the largest business market by size or revenue, but they do represent a sizable market and, I suspect, a sizable percentage of Windows IT Pro Magazine readers. Microsoft uses various methods to measure its business customers. To determine what constitutes a midsized business (or what we might call a midmarket company), the software giant counts connected PCs. Twenty-five or fewer connected PCs constitutes a small business. Five hundred or more PCs represents an enterprise or corporate customer. The midmarket sector encompasses businesses between those two sizes.

How many customers does Microsoft have in each segment? According to the company, it has at least 40 million small business customers, 1.2 million midsized businesses, and 18,000 enterprise customers worldwide.

There's another important way in which these market segments differentiate themselves. Small businesses, naturally, don't have much of an IT staff and often outsource server maintenance. Midsized companies have a small cadre of IT staff, but they're often busy troubleshooting problems and don't have much time to plan or deploy technology upgrades. On the high-end, enterprises not only have competent and professional IT staff, they usually have specialized experts, with certain people focusing on particular technologies, such as databases or email.

Most of you are probably aware that Microsoft makes a Windows Small Business Server (SBS) 2003 product for small businesses. This product bundles Windows Server 2003, Microsoft Exchange Server 2003, Microsoft ISA Server 2004, and, in the high-end version, Microsoft SQL Server 2000, into a cohesive, easy-to-install-and-manage package. Microsoft has opened up new revenue possibilities for its partners by making SBS easy to remotely manage as well.

For the enterprise, Microsoft offers a full suite of products, including a variety of niche products that meet specific high-end customer needs. Unlike the SBS bundle, however, these products don't offer any hand-holding technology and must be integrated manually by well-trained IT staff.

Last week, Microsoft announced a software bundle that seeks to do for midsized businesses what SBS does for small businesses. However, Microsoft's midmarket moves don't include a new product suite with enhanced managements tools, as SBS does. Instead, Microsoft is basically sweetening the deal on a variety of Windows Server System software by offering the products bundled at a 20 percent discount. The company is also providing guidance for migrating, deploying, and maintaining these products.

The bundle is a good deal, I guess, assuming you want (or need) all these products. Here's what you get in the product bundle, which is called Windows Server System for Medium Businesses: Three copies of Windows 2003 Standard Edition, one copy of Exchange 2003 Standard Edition, one copy of Microsoft Operations Management (MOM) 2005 Workgroup Edition, and 50 combined CALs for Windows and Exchange. The cost? About $6400 in the United States or 20 percent off the regular Open License pricing of the individual products. Furthermore, businesses can also purchase as many as 250 of these new combined CALs for $76 each or 20 percent off the typical cost of individual Windows and Exchange CALs. This, too, is a good deal.

Microsoft isn't just dropping prices, however. The biggest problem facing midsized businesses today, perhaps, is that the small IT staff found in most of these businesses is often overrun with troubleshooting problems and can't proactively plan for future upgrades. They reboot crashed servers and fix problems with users' desktops. They patch software and maintain legacy systems such as Windows NT 4.0 and Exchange 5.5. In short, their work days are often hellish, and lower pricing isn't going to be enough to get these people to upgrade.

Fortunately, Microsoft has a lot of prescriptive guidance that can help. It can help you examine your infrastructure and decide where to start and which products to install and deploy first. This information, unfortunately, is currently found only in a new TechNet Web site called the Midsize Business IT Center (See the URL below), and, if you can believe this, in an upcoming Microsoft Press book called "Windows Server System Deployment Guide for Midsized Businesses." I hope that a future generation of this software will integrate the prescriptive guidance directly into the products so that they can intelligently assist IT staff with deployments.

That type of help, alas, is probably years away. So, although midsized businesses can't yet benefit from the wonderful management tools Microsoft offers with SBS, they can at least save some money and, with a little effort, plan a smart migration strategy. They can also start taking advantage of a service that small businesses have been enjoying for years: Midsized businesses can outsource certain IT management tasks to service-oriented Microsoft partners, who can remotely monitor their infrastructures for them. I'll be interested to see a year from now how many midsized businesses decide to go this route.

Regardless, this is just the first small step in what I hope will be a multiphase attack on the problems that midsized businesses face. It can't happen quickly enough.

Midsize Business IT Center

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