Article

Microsoft woos midmarket with server package

Margie Semilof

Microsoft has long savored the potential to sell more software to the vast midmarket, whose companies tend to hold onto their old technology. Until now, however, most of the software manufacturer's server products were aimed at either enterprise or small business customers.

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[The midmarket bundle is] for companies that are too big to run the Small Business Server but not big enough to run a separate server for every Microsoft application.


Michael Speyer, analyst,

Forrester Research

,

Today, Microsoft is introducing a promotional bundle of its software that includes Windows Server 2003 Standard Edition, Exchange Server 2003 Standard Edition and Microsoft Operations Manager 2005 Workgroup Edition. The bundle also includes 50 client access licenses (CAL) for Windows and Exchange.

The CAL is discounted 20% with a maximum of up to 250 licenses per company. For additional CALs over the initial 50 that are included, a company will pay about $76 each. The bundle sells for about $6,400 and is available now, Microsoft said.

Incentive to move off older software

The new bundle is primarily aimed at companies with older Microsoft technology, those facing end-of-life issues and those in need of an upgrade path, said Michael Speyer, a senior analyst at Forrester Research Inc., in Cambridge, Mass. "It's for companies that are too big to run the Small Business Server but not big enough to run a separate server for every Microsoft application," he said.

Previously, a midmarket customer might have bought an enterprise suite, Speyer said. But in a smaller-sized shop where there are IT employees, the organization might not have time to do a conversion or manage it. As a result, there may be a group of companies where a bundle will work just fine, he said.

Microsoft traditionally breaks down its customer base in this manner: Small businesses have about 25 desktops or fewer. Midmarket companies have about 25 to 500 desktops. And any company with more than 500 desktops is considered an enterprise, said Steven VanRoekel, director of Microsoft's mid-market solutions in the Windows Server group.

Need for IT specialists a turn-off for many

The midmarket segment tends to move more slowly to the newest technologies, so in this segment there tends to be a lot of Windows NT and other older software. Microsoft's partners are usually the ones that sell to companies of this size.

Related links

Read about the recent service pack for Small Business Server 2003

 

A guide to negotiating with Microsoft

Most of the products that Microsoft sells above the SMB market are complex and require a lot of IT specialists to administer. There is also a price concern since "the benefits of volume licensing don't kick in until the 250 [user] line," VanRoekel said.

The typical midmarket customer has limited resources to manage a product, and products designed for IT specialists have not resonated well with this type of customer, he said.

Though many midmarket customers get technical advice from their resellers, Microsoft is also planning to launch a spin-off of the TechNet Web site focused on the midmarket. The site, aimed at customers and partners, will give guidance on this particular bundle, VanRoekel said.

A focus on line-of-business applications

Whether a midmarket company will benefit from having several servers rolled into one SKU will depend on the business of the individual company, experts said. Midmarket customers certainly have a strong need to track and control computers in their network and to make that job easier, just as any company would.

But often, companies of this size would prefer to have some kind of bundle that is based on their line-of-business applications and not on the size of the company, said Susan Bradley, a Microsoft most valuable professional (MVP) and a certified public accountant at the firm of Tamiyasu, Smith, Horn and Braun, in Fresno, Calif.

For companies in this situation, working with partners will probably be the best option, VanRoekel said. "We are a high-volume company and the permutations developing for line-of-business applications would take a lot of versions," he said. "Partners can easily attach a line-of-business application and take that to the customer."


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