New Upgrades, Pricing Intended To Propel Partner Profits

At the company's annual partner conference in New Orleans this week, Microsoft plans to officially launch two editions of Windows SBS 2003,both of which incorporate Windows Server 2003 and Exchange 2003,as drivers for snagging cost-conscious entrepreneurial firms and more ambitious small businesses interested in supply chains, they said.

Microsoft will not only release a $599 Standard Edition of SBS this week, but also a high-end Premium Edition that for the first time will incorporate BizTalk Partner Edition, executives said. The enhanced Partner Edition is based on the forthcoming BizTalk 2004, they said.

This will give SBS Premium customers a built-in application integration solution that will enable them to participate in supply chains and B2B transactions with larger partners, executives said.

The enhanced BizTalk offering, priced at $999 as a stand-alone product, will complement the Windows, Exchange, SQL and Internet Security and Acceleration (ISA) firewall servers in the Premium Edition of SBS 2003 for a price of $1,499,the same price as SBS 2000, executives said. Microsoft would not say, however, if it will give SBS 2003 buyers an upgrade coupon for its Yukon database when it ships in 2004.

Microsoft's top SMB executive and top partner executive told CRN during a meeting at company headquarters in Redmond, Wash., last week that the price break on the low-end version,and value-added BizTalk server in the high-end version,will enable channel partners to compete aggressively against Linux in the SMB market.

And Microsoft's 2,500-strong partner field-sales force has a big incentive as well, executives said. Their compensation is tied directly to meeting quotas for SBS sales through the channel, said Allison Watson, Microsoft's vice president of worldwide partner sales and marketing.

Orlando Ayala, senior vice president of Microsoft's Small and Midmarket Solutions & Partner Group, said the price cut,and integration with the company's other software value stacks,will make the product attractive to the SMB software market, which he estimated at $10 billion. "The price was wrong for 70 percent of customers in the past," said Ayala. "We're trying to bring down the barrier of entry. It's a new category of server the market has not seen in the sub-$1,000 space. It's a no-brainer to buy. It'll create new business models for the channel."

Microsoft will also detail major partner opportunities associated with Exchange 2003, executives said. The e-mail server will be officially launched this month even though it was quietly released to customers in August and to retail last month, they said.

That, combined with the Office 2003 and Outlook 2003's new security features, offers partners new opportunities, said Kevin McCuistion, director of product management of Exchange Server marketing.