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Microsoft's New Math on SMB Servers

Microsoft announced today that it is shipping a preview version of one of its upcoming server bundles for small- and medium-sized businesses and also disclosed pricing for the products, which includes a sizable increase for the small business package.

Interested parties can now download and evaluate Windows Essential Business Server (EBS) 2008 Release Candidate 0 (RC0). Microsoft (NASDAQ: MSFT) announced the availability during a Live Meeting conference with media and analysts. Meanwhile, Small Business Server (SBS) 2008 will be available for public preview in two to three weeks.

The server product bundles aim to provide plug-and-play solutions for small and mid-sized businesses, as well as for resellers and system integrators who serve those markets. Although SBS has been around for more than a decade, EBS is a brand new bundle.

Both will provide the basic server products needed to enable a small- or medium-sized business to have the types of IT capabilities normally associated with enterprise IT shops.

For instance, Standard Editions of the bundles will provide Windows Server 2008, which includes Internet Information Server and Active Directory -- as well as Exchange Server 2007 to provide corporate e-mail and scheduling functions. They also will include SharePoint Services 3.0 for collaboration and document management.

Premium releases of the two will add SQL Server 2008 to support transaction-based computing applications and an extra copy of Windows Server 2008 to run it. The Standard Edition of EBS comes with three copies of Windows Server 2008 so that, for instance, Exchange can be run on a separate server than the domain controller.

Microsoft architected both the bundles and the pricing to be significantly less expensive than purchasing each product separately. Additionally, in order to make the bundles as close to turnkey installation as possible, they cut down the number of mouse clicks required to set the servers up. For example, installation of the EBS was reduced from 129 mouse clicks to 30, a Microsoft official said.

"Small and mid-sized businesses may be smaller but they have the same needs as bigger businesses," Mike Risse, vice president of Micosoft's Worldwide Small and Midmarket Business Group, said during the Live Meeting conference.

Microsoft has been eking out more details about the Essential Server Solutions bundles every few months in a bid to build excitement about the offerings. This time, however, costs for the new version of SBS jumped.

The advent of SBS 2008 means that the Standard Edition, with five client access licenses (CAL) included will rise to $1,089. As an example, the previous version, SBS 2003 R2 Standard Edition, costs only $599, including five client access licenses (CALs). One change, though, allows customers to add single CALs at $77 apiece rather than requiring a minimum of five CALs each time the customer needs to upgrade.

"Customers will be able to purchase single CALs, so they will pay only for the exact number of employees using the products," a company spokesperson said in an e-mail to

The Premium Edition of SBS 2008, in the meantime, adds an extra copy of Windows Server 2008 and SQL Server 2008. It will cost $1,899, with five CALs, and additional CALs costing $189 each.

The new pricing may be jarring to some, but Microsoft often kicks in discounts and other credits that make price increases have much less of an impact than they would seem, said an analyst who attended the Live Meeting. Then there's the ability to buy extra CALs one at a time, which can be a money saver as well.

Single CALs aren't enough to rationalize the price increase, but they were pretty aggressive with SBS 2003 pricing, Rob Enderle, principal analyst at Enderle Group, So it's not too surprising that Microsoft would raise the pricing now.

There will also be both Standard and Premium Editions of EBS 2008. The Standard Edition, with five CALs, will cost $5,472. Added CALs cost $81 each. EBS 2008 Premium will cost $7,163, with extra CALs priced at $195 apiece.

SBS is designed for customers with up to 50 employees, but can support up to 75, while EBS is designed to support as many as 250, the company said. Both are built around Windows Server 2008.

Microsoft introduced Essential Business Server 2008 in November. Previously codenamed Centro, the company also re-branded both it and SBS as part of the Essential Server Solutions family of products in February.

SBS 2008 will include Standard Editions of Windows Server 2008, Exchange Server 2007, and SharePoint Services 3.0. It also provides Forefront Security for Exchange, Live OneCare for servers, and integration with Office Live Services for Small Business. The Premium package adds SQL Server as well as the extra copy of Windows Server 2008 to run it on.

EBS 2008 includes the products included in SBS Standard Edition, plus System Center Essentials and Forefront Threat Management Gateway. However, EBS Standard comes with three copies of Windows Server 2008 – one to provide a domain server, one to host Exchange Server 2007, and one to provide a security server. Like SBS, the Premium Edition adds an extra copy of Windows Server 2008 and SQL Server 2008.

Both sets of bundles are scheduled to be commercially available during the second half of the year. Currently, SQL Server 2008 is still on track to ship in the second half of 2008 as well.

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