Few vendors have been as successful in creating a reseller following as Microsoft. In the grand scheme of things, the channel's dependency on Microsoft's ability to gerrymander product releases -- pushing an apathetic market into a buying frenzy - has been described both as marketing mastery and a sad case of reseller under-diversification. Whether it is Windows 2000, XP or the X box, the game seems to always follow the same rules: Microsoft markets; resellers make money.
It's unusual to identify a failed Microsoft product, one that it didn't market well and resellers haven't made money on. But when in 1998 Microsoft released its Small Business Server, looking for an entry into the small-to-medium networking market, the product failed to take off. Originally released on the NT platform, the suite competed against Novell's Small Business Suite and Linux. Its inability to make a mark was reportedly caused by some early product limitations.
"The first two versions supported only 25 concurrent users and had an SQL server database limit of 10 gigabytes," explains John Ball, Microsoft Australia's distribution manager. "But these limitations have been removed with the release of SBS 2000, the third version of the product, which is now seen as very stable and features a number of best-of-breed' applications."
Until recently, Microsoft's effort in marketing the product has been scant. As the release of its Version 3 coincided with the Windows 2000 marketing push, SBS V3 had to compete with a horse from its own stable. Part of the problem, according to Ball, was that the two products were handled by competing marketing teams. This changed when Microsoft relaunched the product with a new message, positioning SBS as the operating system SMBs should use - not only as an economical alternative to Unix and Linux, but also as a platform superior to Windows 2000 in the SMB networking space.
Given that more than 95 per cent of small businesses in Australia operate with less than 50 PCs, the market opportunity for an integrated SMB suite, such as Small Business Server 2000, is sizeable. Combined with the increased demand for integrated communication, collaboration and messaging infrastructure, and the mindshare monopoly that the Microsoft brand has on the lower end of town, the concept should have been a winner. But, according to Wayne Small, managing director of Microsoft partner Correct Solutions, Microsoft's focus on product awareness - rather than channel education - has significantly slowed reseller uptake.
"This is an out-of-box product that has a high potential, but resellers are still not comfortable with it," Small says. "Part of the reason is that Microsoft spent the last two years marketing the product to the end-user, instead of focusing on its channel . . . The reality is that achieving product awareness among small business owners is very difficult. They don't know much about technology and buy by referral, so it is up to resellers to go out and sell it."
Relaunched 14 months ago, Version 3 of the Small Business Server targets the five to 50 concurrent users PC network segment. In Australia alone, there are 250,000 organisations that fit this profile, and Ball claims the product's penetration in this segment has been significant. As Microsoft's leading network solution for the SMB space, it has just recorded a 40 per cent year-on-year growth, he says. Yet anecdotal evidence suggests that both sales and service opportunities in this market remain untapped.
"There is a strong proposition around integrating and Web-enabling applications in the SMB market," says Jules Boyd, director of sales at Novell, Microsoft's only serious competitor in the SMB networking space. "We are certainly seeing a lot of growth in the up to 250 users market, and we're continuing to invest in that space."
Give em what they want
While not prepared to comment on SBS, Boyd believes the demand for price-competitive SMB application suites geared towards the Internet is increasing as customers move from peer-to-peer to a networking model. Whether he considered Novell a significant contender in this race, he wouldn't say, but given the lack of Linux expertise in the SMB space, it is unlikely that SMB networking could ever be more than a two-horse race.
"We are currently focusing on what customers in the SMB space want - and that is bundling collaboration and office automation with security, and on top of that, being able to provide a simple and reliable operating environment in a cost-effective way," he explains. And that's exactly where its arch-rival is heading with SBS.
"SBS is an integrated solution consisting of several components which are software in their own right," explains Mark O'Shea, Microsoft Australia's principal technology specialist. "Since its 4.0 and 4.5 releases, each of the components has been updated, delivering more functionality and better value."
The components included are full versions of Exchange Server 2000, Internet Acceleration Server 2000 (ISA) and SQL Server 2000. Windows 2000 Server is the base operating system included with this release, which, according to O'Shea, must be set up at the root of an Active Directory forest with no domain trusts. It also includes custom consoles for simplified remote administration and alerting, as well as shared fax and shared modem capabilities. SBS also helps to automate the set up of applications on the client PCs, allowing easy deployment of new applications to multiple users.
Although it is designed and licensed as a single server solution, O'Shea says additional servers can be added for specialised purposes. "A common misconception is that additional servers cannot be added to an SBS environment, but this is clearly not the case," he says. "Terminal Server can be added for application sharing, as well as line of business application servers and domain controllers, with the Small Business Server suite remaining at the root of the AD forest."
Microsoft claims the channel can be comfortable that the product is not a dead-end solution for small business customers. If customers reach the 50-user limit, the product can be upgraded with the Small Business Server Migration Pack, which allows the splitting of the components across multiple servers, and allows for the addition of more clients.
And then there are service opportunities. "It's all about managing and maintaining the customer's infrastructure," says Ball. "While SBS is a price sell, its strength is that it allows the reseller to add service components."
O'Shea believes opportunities around SBS far exceed the network setup and training services traditionally delivered with file and print server installations. "Due to the functionality included in SBS, a broad range of services such as Web Services, VPN infrastructure, Knowledge Management, and Practice Management application integration can be included as part of a SBS customer proposal," he says.
The inclusion of Exchange Server allows the ability to easily enhance collaboration capabilities whether in the office or out on the road. Outlook Web Access is a standard part of the installation, allowing secure access to e-mail from anywhere on the Web.
SQL Server's inclusion not only allows existing databases to be migrated across to the server, but also it is a requirement for many line of business applications that small businesses may require. Microsoft claims SBS is the most cost-effective way for small businesses to get SQL Server onto their network, providing significant cost savings.
ISA Server provides ICSA-certified firewall functionality, as well as a cache engine to maximise Internet bandwidth. ISA also allows for the easy creation of a VPN infrastructure, creating a gateway into the network for remote workers. Rounding out the communication features are the faxing capabilities which are tightly integrated in the included Outlook client.
Although it doesn't have a significant price advantage over Novell product (Novell's Small Business Suite starts at about $2,400, while SBS can cost $2,000 and upwards), in the SMB space Microsoft certainly has a brand advantage. Combined with the reseller training push, this may just be what gives SBS V3 a new lease on life. After all, as Small observes, Microsoft is about small business, not the top end.