Microsoft Playing To Win, Takes On IBM In Midmarket

While most of the marketing around the upcoming Windows 2003 Server has centered on enterprise enhancements, Microsoft is lining up hundreds of "referenceable" midmarket success stories and financing a good percentage of them.

"They want to expedite upgrades [to Windows Server 2003] and show it to be the platform for the midmarket," said one solution provider familiar with the plan.

In the first Microsoft Rapid Deployment Program to be offered to the midmarket, partners were asked to find accounts needing upgrades from NetWare, Windows NT 4 or 2000, according to Microsoft. The customer, partner and Microsoft split implementation costs equally. The partner must agree to bill the customer at $100 per hour for the entire project, and the customer pays for all software. Rapid Deployment Programs have been used in enterprise accounts since the Windows 2000 launch.

With this plan, Microsoft hopes to build a groundswell of midmarket wins heading into the formal Windows Server 2003 launch on April 24.

Sources close to the company said the release to manufacturing (RTM) date for the operating system has been pushed back, from Feb. 28 to March 12. But they said that change should not impact general availability or the launch.

Microsoft partners said the new operating system should play well to midmarket needs. "The entire .Net architecture, when implemented from the server to the apps to the framework, will equate to probably a 66 percent increase in performance [compared with Windows 2000]," said Frederick Volking, an IT consultant serving the state of South Carolina. "Bottom line: I buy far less boxes, far less licensing from Microsoft, and maintenance is cut way down."

Microsoft defines the midmarket as companies with 50 to 500 PCs.

It's natural that Microsoft would fight hard to keep this turf, where it made its name. Microsoft wants its software stack--already entrenched on the desktop--to permeate the server as well. But the messages driving upcoming releases, from Windows 2003 to the 64-bit version of SQL Server 2000, have been largely enterprise-focused. Microsoft is still struggling to prove that its lineup has the built-in scalability, security and reliability needed by the largest enterprises.

Meanwhile, IBM, with its history of enterprise credibility, is spending millions on channel programs and products for the midmarket. While IBM supports Microsoft's operating systems, it also is pushing Linux hard into this segment and is battling Microsoft with J2EE-centric middleware and tools.

Microsoft is watching IBM "very closely," said Katy Hunter, Windows Server group product manager at Microsoft. "IBM preaches the value of integration, and that's an enormous value for strained IT infrastructures," she said. "But I think Microsoft is better at delivering that integration."

Windows Server 2003 has oodles of enhancements for smaller enterprises, Hunter said. Rule-based configuration, for example, will ease setup for these accounts. If the server's main role is file and print services, the administrator can designate that function and be presented with setup and management options consistent with that role, she said.

Microsoft wants servers to be easy and inexpensive to install so that partners can get smaller businesses up and running fast. Yet servers must act as a foundation for value-added services designed to derive "more dollars per customer" for the partner, Hunter said.

Windows 2003's SharePoint Team Services capabilities, for example, have been rebuilt around Internet Information Server 6.0 and the .Net framework. The result is that partners can build shared workspaces for customers to facilitate remote support. Solution providers also can leverage reusable Web Parts to customize apps or build their own. And some of the enterprise scalability messages around the operating system should resonate with midmarket companies.