Microsoft Releases Small Business Server 2003 R2 To Manufacturing

Microsoft is releasing Windows Small Business Server 2003 R2 to manufacturing this week.

The Small Business Server (SBS) upgrade will be officially launched at Microsoft’s annual partner summit in July, but OEM pre-installs on servers and general availability isn't expected until later this summer, the Redmond, Wash., company said.

SBS 2003 R2 had been scheduled for delivery by the end of June, but few solution providers are sweating out the delay. R2 offers automated network patch and update management, a new Green Check feature that yields security information, and support for 75 Gbytes of e-mail. The Premium Edition also includes SQL Server 2005 Workgroup Edition.

Many partners think current SBS customers will bypass the upgrade because it uses Windows Server 2003 SP1 rather than the recently released Windows Server 2003 R2 and offers few compelling new features.

"No, there's not much interest at all. The Green Check feature isn’t worth the price of the upgrade. There just is not a lot of compelling value in SBS R2 that makes us want to recommend it to our clients," said Jason Harrison, president of Harrison Technology Consulting, Nashville, N.C."The only case would be if we have a client who needs [update services] or SQL 2005 for some reason. SBS R2 Premium might make sense in that scenario," Harrison said. "New installations also make sense, but upgrading will be light."

Microsoft is the undisputed leader in the small- and midsize-business server market, but Linux rivals have lined up new SMB products and channel incentives just as SBS 2003 R2 nears delivery. Last month, Novell shipped its new Linux-based Open Workgroup Suite. Xandros and Collax also stepped up to the plate in May with new SMB servers and channel initiatives that target SMB customers and VARs in the United States, respectively. And South African Linux vendor Ubuntu last week launched its first server for enterprise customers, and industry observers expect the company to make a play for SMB customers as well.

Despite Linux's success in the enterprise server space, the open-source operating system has yet to make a significant dent against Windows SBS 2003 in the SMB market.

"Microsoft has this segment completely wrapped up, and SBS has no competition from what we have seen. There are other small-business server offerings out there, but they do not compare," Harrison said. "Demand in this market is driven by our recommendations. Most small-business owners are so disconnected from the tech tools available to them. They don’t know what is possible without our help."

Harrison advised Linux rivals to abandon the grassroots marketing approach that succeeded with IT administrators in enterprise firms and government offices. Linux may be priced right for the cost-conscious SMB market, but Linux vendors won't get any traction without getting channel support, he said.Novell, Xandros and Collax seem to be heeding that message. All of the vendors recently launched new products and initiatives to make solution providers aware of their SMB alternatives to SBS, especially as Microsoft prepares to ship SBS 2003 R2 and the next-generation SBS, code-named Cougar, in the 2007-2008 time frame.

Novell is on its third attempt to steal market share from SBS. In early May, Novell rolled out its Linux Workgroup Suite that replaces the legacy Novell Small Business Suite and Novell Linux Small Business Suite, which largely failed in the marketplace.

Novell integrated its leading products in a suite that runs on Linux or Windows at an attractive price point for SMBs. The suite includes Novell's Open Enterprise Server (including SUSE Linux Enterprise Server), GroupWise, ZenWorks, Novell Linux Desktop and OpenOffice.org for Windows and Linux. Pricing starts at $80 per year for a subscription or $110 per user or device for a perpetual license. Annual maintenance is $75 per user. Novell also launched a number of channel incentives to drive sales of the suite.

Xandros, the New York-based firm that bought Corel's Linux business five years ago, unveiled an easy-to-administer Linux SMB suite in April for about $450. Late last month, the company updated the suite with support for 64-bit extended processors from Intel and AMD. Based on Debian Linux, Xandros Server offers the Xandros Management Console and compatibility with Windows servers and supports Intel and AMD extended 64-bit processors that run 32-bit and 64-bit applications.

And last week, Collax opened an office in the Boston area to market its Collax Business Server more aggressively in the United States through the channel. Collax Business Server is a Linux server solution targeted at SMB customers with little or no Linux experience that incorporates security, networking and communication features.

Though some solution providers say Microsoft has nothing to worry about in the small-business server realm, other solution providers see Linux quietly taking root in the SMB space."The basis of the SMB market has been and continues to be the trust relationship between a small business and its technology vendors," said James Fogg, owner of JD Fogg Technology Consulting, Wilmot, N.H. "I know businesses that do brisk sales of Linux to SMBs, and I know businesses that only sell Microsoft solutions to SMBs."

One Microsoft Small Business Server expert and solution provider sees opportunities for Microsoft and Linux players to grab new customers in the SMB space.

"I do see Linux making inroads in SMB in the storage space. There are lots of NAS devices out there running on Linux, and customers are storing more and more data on Linux boxes integrated into Windows environments," said Michael Cocanower, president of ITSynergy, Phoenix. "It scares me, frankly, because I don't want my customers’ data on a Linux box. I'd rather see it on a Microsoft box just to keep the integration story strong."

Other solution providers said Linux companies in the SMB space should worry more about obscurity than the 800-lb. gorilla. The tough part is getting to customers and partners--not out-marketing Microsoft, they said.

"The smallest companies with one to 20 employees often don't understand the benefits of server technology or don't trust the ROI projections," Fogg said. "Those companies often elect to stay with peer-to-peer networks.”Marketing in the SMB space is a challenge, said Carlos Paz Soldan, a vice president at Tenet Computer Group, a Toronto-based Novell Platinum Partner and Microsoft Gold Certified Partner. "We focus on the medium section of SMB, but even in our smallest clients we barely see demand for so-called SMB solutions," he said.

"Those that appreciate and can afford the value-add of a VAR probably have enough money or interest in their IT to implement unrestricted, non-SMB products," Soldan added.