Microsoft's server business climbing

Enterprise sales are up and revenue for the company's server software alone is "nipping at the heels of $10 billion," according to a top executive.

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Microsoft's enterprise business contributed to a solid portion of the company's growth in fiscal 2005, with the management software business alone on track to reach the $1 billion revenue mark in the foreseeable future, the company predicted.

Eric Rudder, senior vice president of Microsoft's servers and tools business, said Thursday at the company's annual meeting with financial analysts that he is upbeat about the company's management software business, which recently passed the $400 million mark.

Rudder said the System Center Data Protection Manager, the company's first foray into disk-based backup software, will ship this week. The System Center portfolio will further expand in 2006 with the release of System Center Reporting Manager, a data warehousing platform for storing information about Microsoft Operations Manager (MOM) and Systems Management Server (SMS).

The server business in total is "nipping at the heels of $10 billion," Rudder said. More than 80% of the company's installed base is on Windows Server, versus NT 4. Active Directory usage has increased more than 30% in the mid-market and in the enterprise, he said.

Rudder said Microsoft's database business grew 20% this year. SQL Server 2005 is due to ship Nov. 7.

Rudder was particularly bullish about the growth potential for the company's Exchange Server business, which he said grew more than 10%. "There is an opportunity to grow the business in upgrades, there is competitive share to get with [IBM Lotus] Notes," Rudder said.

He also said Microsoft would release a new suite of software for animation, called Microsoft Expression Studio, to be used with Longhorn.

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