Home Server Market Faces Uphill Climb - Report

Microsoft's Windows Home Server has generated a lot of buzz in the channel since last November's launch, but it's going to take several years for consumers to see the value of having a server in the home.

At least, that's the conclusion drawn by researchers at Forrester, who recently suggested that home servers won't begin making significant headway until 2012, when the Boston-based research firm predicts they'll be in use in about 4.6 million U.S. homes.

Microsoft's small business focused channel partners who've been dealing with a flood of Windows Home Server related inquiries from customers say this estimate is well off the mark.

"I think [Forrester is] overestimating the amount of time it's going to take for this market to heat up," said Michael Cocanower, president of Phoenix-based solution provider ITSynergy.

Cocanower expects the growing number of homes with multiple PCs to drive demand for home servers more quickly than Forrester predicts, and he also notes that Windows Home Server features like image based backup are resonating with small business users.

Forrester expects the $300 to $750 price range for home servers, as well as the reality that some consumers don't know what a server actually does, to contribute to the slow development of the home server segment.

But if Microsoft simply positions Windows Home Server as a central store that serves as its own backup, consumers will eventually see that data backup is just as important in the home as it is in the office environment, predicts Jack Safrit, president of Axxys Technologies, a VAR based in the Dallas suburb of Frisco, Texas.

"It's one thing to have employees complaining because they can't get to data, but if it's your spouse, you could be in even worse trouble," said Safrit. "If Microsoft and its hardware partners can get creative in terms of pricing, and form factor, Windows Home Server will likely catch on faster."

Windows Home Server won't be sold at retail, but through Microsoft's OEM partners led by Hewlett-Packard, whose Media Smart Server started hitting retail shelves last month, priced at $599 for a 500-gigabyte-model and $749 for a 1 terabyte model.

Mark Crall, president of Charlotte Tech Care Team, a Microsoft Small Business Specialist in Charlotte, N.C., expects future demand for Windows Home Server to be determined by the marketing efforts of both Microsoft and its OEM partners.

"A lot will depend on Microsoft's partners and how they display the functionality and applications of Windows Home Server in the home environment," said Crall.

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