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Windows Home Server remains a tough sell

Even the bullish say it's destined to be a niche product, with one analyst projecting that even in five years, only about 3 percent of American homes will have one.

Microsoft has largely succeeded in getting a PC into the home, but its effort to put a server there will be an uphill battle.

Bill Gates announced the product to much fanfare at last year's Consumer Electronics Show. However, even folks who are bullish on the concept, such as Forrester Research analyst J.P. Gownder, say it's destined to be a niche product for years to come.

In a soon-to-be-published research report, Gownder figures that home servers (not just those running Microsoft's home server product) will reach 4.5 million households by 2012. That's up from just 190,000 such servers last year.

Gates keynote

"That's a pretty good growth rate," Gownder said, though he added that "it's still a niche product, at that point," with his forecast representing home servers in only about 3 percent of American homes five years from now.

Gownder said the rise in multiple-PC homes, the increase of broadband, and the fact that people now store their music and photos on computers creates the necessary conditions for a home server to be practical. "We really are at a point in history where a home server might actually make sense," Gownder said.

But, he said, it's still a tough sell. Most people don't know what a server is. And even those who do have an understanding of servers from work may not have such a favorable impression. "They know that it goes down sometimes," Gownder said. "They know that it causes problems for them."

The one thing that could speed up the slow path to the mainstream, Gownder said, is if a cable company or other TV provider chose to deploy home servers as part of their service.

That concept is not so far-fetched, he said, given the fact that providers are having a tough time keeping up with on-demand TV requirements as content shifts to high definition. Such an approach could lead to growth 10 times what Gownder has forecast.

Microsoft has its own challenges with its Windows Home Server software. The company has struggled to get it into products and onto retail shelves. Hewlett-Packard delayed its shipment until late last year, and few other big-name computer makers have followed with products of their own.

The biggest recent news was negative, with the company announcing a bad bug that could lead to file corruption and data loss. Not exactly the kind of news that makes Middle America want to rush out and buy one.

Microsoft's Steven VanRoekel said the product's sales have exceeded the company's expectations, though he declined to give specific numbers.

"It's definitely tens of thousands," VanRoekel said, "which in a month and a half is good."

One area that Microsoft may look at to boost the popularity of the Home Server is having the software work better in households that have both Macs and Windows PCs.

"That's something we are taking a close look at," VanRoekel said, though he added that Microsoft has "nothing to announce."