Analyst: Microsoft Rules Another Market With Small Biz Server

"Who knew this was going to be such as huge hit?" said Laura DiDio, the Yankee Group senior analyst who conducted the survey of some 500 small and mid-sized businesses, as well as resellers and consultants.

More than twice as many use or plan to roll out Windows Small Business Server (SBS) 2003 than use or plan to deploy the earlier Windows SBS 2000, said DiDio, numbers that support the much better market performance of the newer edition of Microsoft's small business bundle.

SBS 2003 comes in two versions, the $599 Standard and the $1,499 Premium, and incorporates Windows Server 2003, Exchange Server, SQL Server, Internet Information Server, Front Page, the Microsoft Management Console (MMC). Premium adds Internet Security and Acceleration Server (ISA).

Microsoft literally owns the SMB market, said DiDio, since competitors such as Novell Small Business Suite and Linux in general are barely a blip for these customers. Only 3 percent said they planned to purchase Novell's offering, while just 11 percent said they were using, or are going to use, the open-source Linux OS.

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"These customers don't care about the brand name," said DiDio. "Linux is not even on their radar, and actually, they don't even much care that SBS comes from Microsoft. They just want something that will be the most cost-effective and efficient."

DiDio credits resellers and consultants with the success of SBS 2000 and SBS 2003, not Microsoft. "Virtually every reseller we talked to was absolutely enthralled with the product and the money they're making [off it]," she said. "You know what they say: 'Nothing says love like cold hard cash.'"

Resellers and consultants, which sometimes dub SBS as "Baby Back Office," praise the product in large part because of the revenues it's brought them. Among the more than 50 resellers contacted, sales increases averaged from 100 to 300 percent over last year due to SBS deployments and migrations.

"Linux and open-source don't have anything that can compete with the bundled feature set of SBS 2003," she said.

But while Microsoft's making hay while the sun shines, DiDio had some advice for the Redmond, Wash.-based developer. "They struck gold here, but now they've got to do some concerted advertising around it to get the word out even more."

And Microsoft would be well advised to make other changes. "Microsoft's licensing model confuses a lot of these SMB customers," DiDio said. "The whole Client Access License (CAL) concept is tough for them to understand."

Under Microsoft's licensing program, buyers of SBS 2003 receive five CALs with the server license, then pay $96-98 per additional CAL.

The success of SBS 2003 has been aided and abetted, said DiDio, by a general loosening of SMB purse strings. Companies surveyed said that they were planning on spending 8 percent to 15 percent more on software during the 2004-2005 time frame.

"We'll see wave of SBS deployments continuing right up through 2004 and 2005," she concluded.

"No doubt about it, Microsoft was in the right place and the right time with this one."

This story courtesy of TechWeb News