Services & Software

Microsoft courts midsize firms with server bundle

Redmond says move addresses a flaw in its current licensing structure that favors small and large companies over medium-size ones.

In what could be a prelude to a new server product for midsize businesses, Microsoft announced Thursday a new bundle that saves such companies up to 20 percent if they buy a set of Microsoft programs.

The promotion combines three Windows Server operating system licenses, one server license for the Exchange calendar and e-mail software, and a single server license for the Microsoft Operations Manager (MOM) 2005 product--along with the right to access the software from up to 50 computers. The package, which will be available through resellers and on new servers, will sell for about $6,400, or a discount of roughly 20 percent compared with what customers pay under standard Open licenses.

Microsoft said the move addresses a shortcoming in its current licensing structure, in which both smaller and larger businesses can end up paying less than midsize businesses.

"The midmarket was typically paying more than the segment above them and the segment below them," said Steven VanRoekel, director of midmarket solutions for Microsoft's Windows Server unit. At the same time, VanRoekel and others at the software maker said the company is exploring whether to develop products specifically tailored to the midmarket.

The announcement comes as Microsoft prepares for its annual conference for partners, which starts Friday in Minneapolis.

Analysts said the move is a baby step in the right direction.

"I think they just wanted to put a stake in the ground, however small it may be," said Gartner analyst Mika Krammer. "It's a complete packaging play. There is nothing here that is built for the midmarket."

Krammer also noted that a customer would have to have needs that just happen to map to exactly what Microsoft is offering in order to really save money with the new bundle.

Microsoft said it is already boosting its share of the $231 billion that such businesses spend each year on computer software, hardware and services.

Krammer said she does expect that over time Microsoft will try to craft products that are more geared toward midsize businesses, noting that IBM has been doing a good job of that for some time.

"Customers vote with their dollars, and our solutions are resonating with them, although there is lots more to do," said John Lauer, a vice president in Microsoft's Small and Midmarket Solutions and Partner unit.

The company already has its Small Business Server product, which combines the Windows Server operating system and the Exchange e-mail and calendaring program in one package. It is also developing a small-business accounting package that will compete with Intuit's QuickBooks and other products.

"I think this is just a signal to the market of things to come," Krammer said. But even offering special pricing is more recognition than has occurred before, Krammer said. "They've been less than deliberate in terms of how they have focused on the midmarket in the past."

Microsoft said that the new promotion will run for one year and that the company is looking at whether to create more specific products for midsize businesses.

"We're definitely, across the company, evaluating 'Does that make sense?'" Lauer said.

Arguably the company's biggest push in the midmarket has been the Microsoft Business Solutions unit, which sells customer relationship and other business operations software. That unit was formed out of several acquisitions, including Great Plains Software and Navision.

Oracle and SAP have also been trying to ramp up their sales efforts to midsize companies.

Though specific products seem like they might be a natural, Lauer said it's not always easy to see what enterprise features are not needed in a midmarket product. "They need a lot of the power and functionality and flexibility that is required in the enterprise," Lauer said.