Microsoft Announces Aggressive SBS Pricing

In a meeting I had with Microsoft last week, company officials revealed Microsoft Small Business Server (SBS) 2003 pricing and licensing information. If you're in the market for the company's suddenly surging small-business offering, you're in luck: It's priced to sell. SBS 2003 will be available in two editions. The low-end SBS 2003 Standard Edition will cost $599 for a five-Client Access License (CAL) version. The standard edition will include Windows Server 2003, Standard Edition; Microsoft Exchange Server 2003 Standard Edition; Windows SharePoint Services (WSS); and the Microsoft Shared Fax Service. The more complete SBS 2003 Premium Edition, which will include everything in the standard edition plus Microsoft Internet Security and Acceleration (ISA) Server 2000, Microsoft SQL Server 2000, and Microsoft Office FrontPage 2003, will start at $999. Previous SBS customers can upgrade their software to only the premium version because no standard edition was available in previous versions.

Another new SBS 2003 feature is machine bundles, and if the pricing of these servers doesn't make this product a best-seller, nothing will. Bundled with low-end server hardware, SBS 2003 Standard Edition will set you back $999 to start, although you'll probably want to upgrade at least the RAM on such a machine. Hardware bundles with SBS 2003 Premium Edition will start at roughly $1499. Although based on low-end hardware, most bundles should be acceptable for the low employee count at the small businesses that Microsoft expects to adopt this product. Major PC makers such as Dell and HP will soon announce their SBS 2003 server bundles, Microsoft said.

SBS 2003 will also offer new CAL pricing. Previously, SBS CALs cost about $69 each, but the price has gone up to $99. However, when you factor in the cost of the individual products and their CALs independently, this price is actually inline with previous versions. And as expected, SBS 2003 customers can now purchase up to 75 CALs per server, up from 50 CALs with previous versions.

"The product today still targets customers with 50 or fewer PCs," Microsoft spokesperson Katy Hunter told me. "It's still the right target, we think. But we previously had a hard stop at 50 [CALs], and there wasn't enough headroom for upgraders. Previously, 39 user deployments was about the highest we saw, because customers were afraid of hitting the [CAL] limit. So now the limit is 75 users. This gives customers time to plan migrations, and it addresses the 50-user market with enough headroom that they can deploy the full 50 CALs. And going from 50 CALs to 51 CALs is not a problem now. It's not catastrophic."

Perhaps more important, Microsoft is pushing its SBS migration strategy with this version. Although the company introduced limited migration capabilities and pricing with SBS 2000, SBS 2003 includes a more comprehensive and well-planned migration strategy. Contrary to what many people think, you can expand an SBS 2003 setup to the full range of standard Microsoft servers if necessary. You can also mix and match other Microsoft servers within an SBS domain if desired. Here are some ways in which you might do this.

First, you can add secondary domain controllers (DCs) to an SBS 2003 domain, although Microsoft strongly recommends that the SBS 2003 server be the original DC and the root of your Active Directory (AD) forest. For this purpose, you could simply add a Windows 2003 Standard Edition-based server, giving you the AD replication and backup features that systems administration experts recommend (under the default SBS 2003 one-server setup, you must back up regularly and suffer through server downtime if anything happens to that one server).

Second, if your business grows and you need to exceed SBS 2003's 75 CAL limit, Microsoft will offer strong migration offerings for SBS 2003 Standard Edition, SBS 2003 Premium Edition, and the CALs. The prices of these offerings differ depending on your need. Let's say you have an SBS 2003 Standard Edition setup and need to upgrade to a 100-CAL Exchange 2003 license. To figure out the price, simply subtract the cost of the SBS 2003 installation and all previously purchased SBS 2003 CALs from the cost of Windows 2003 Standard, Exchange 2003 Standard, and 100 CALs. The idea is that your SBS 2003 investment never loses value: It's always worth its original cost when you apply it toward a migration upgrade.

Because of SBS 2003's ability to expand and the previously mentioned low bundle prices, I expect SBS 2003 to be a huge success. Microsoft does too. Hunter compared SBS 2003 to Windows 95, predicting that this product would transform small-business computing in the same way that Win95 did for PCs. "Before Windows 95, PCs were essentially a niche product," she said. "But with the Start button and the accessibility features we added in Windows 95, PCs became huge. We're doing that with small-business computing now with Small Business Server 2003. Our early adopter customers are already seeing huge returns; it's huge, a slam dunk. People are going to be able to recoup their investments within the first year of use. There is a huge need for what we call 'simplicity innovation,' and we hadn't been focusing on that vector previously. It was always about making something bigger, faster, better. With SBS 2003, it's about hitting the basics in the best way we can. It's a more practical approach that will increase customers' value in their computers."

Microsoft will ship SBS 2003 in early October, and its hardware partners will announce PC server bundles at that time. And although SBS has always been a great value, the new version is the least expensive way of getting maximum value from Windows 2003-based computing. SBS 2003 is a product worth investigating.