Is Microsoft Leaving Small Business Behind?

These days the name Microsoft is virtually synonymous with enterprise. However, the enterprise is not where Microsoft came from: Microsoft got its start with MS-DOS and later Windows on personal computers. Consumers liked using Windows at home, and Windows worked its way into business from the bottom up. Back then Windows was designed for consumer ease of use.

At first few thought Microsoft could be a contender when it entered the server market with Windows Server NT sporting the easy-to-use Windows front end. SQL Server 6.0 and SQL Server 6.5 were still considered small business or departmental databases that couldn’t compete with the likes of Oracle and DB2. However, businesses looking for simpler and less costly solutions began choosing Microsoft products (e.g., Word over WordPerfect, Excel over Lotus 123, and Windows NT over Novell NetWare), giving Microsoft a foothold in the enterprise.

At that time IBM was the dominant force in business. IBM solutions were all targeted at enterprise customers. IBM took all of its feedback and product direction from its biggest and most important customers, and IBM products became more sophisticated, more complex, and more expensive. Now IBM products are so user unfriendly and complex that most of them serve as gateways for IBM to sell consulting services.

Nowadays, Microsoft is the dominant player in the enterprise market. Perhaps inevitably, as Microsoft grew into an enterprise player the complexity of its products grew as well. Instead of looking to sell first to consumers, Microsoft now looks to sell to business. The company now focuses less on the ease of use of its products than on enterprise scalability and security. Even though Microsoft might still get some feedback from consumers, it has been focusing on getting product feedback from Technology Adoption Programs (TAP) and Rapid Deployment Program (RDP) customers. These are predominantly enterprise customers. Although the names have changed, Microsoft’s relationships with enterprise customers closely parallels the relationships IBM had with customers in the past.

Don’t get me wrong. The enterprise focus isn’t in itself a bad thing, and in fact the enterprise evolution seemed inevitable so that Microsoft could grow its products and its market base. Enterprise customers tend to be sophisticated and have complex needs; their feedback leads to sophisticated and complex products. However, it’s a mistake to think that the solutions designed for the enterprise will work for small business. An enterprise will readily accept complexity if it solves an important pain point or addresses a key business issue.

But features that solve an enterprise’ problems often add needless complexity for a smaller organization. This is why a product for ISVs like SQL Server Express (a favorite of mine) is having a tough time competing with the much smaller, simpler, open source MySQL. Even Microsoft products that supposedly target the small business, such as Windows Small Business Server, aren’t really simple. Microsoft added wizards to try to mask the product’s complexity, but at the end of the day it’s really designed for a sophisticated consultant who manages a small business’ infrastructure.

Today many Microsoft products stand at the brink of the maximum complexity and price that many small businesses don’t have the bandwidth to handle. Let’s see what’s happening with price: Microsoft has dropped the more affordable Visual Studio 2008 Standard edition and replaced its spot in the lineup with the new high-end Visual Studio 2010 Ultimate edition. A license for SQL Server 2008 R2 Standard edition will be about $1500 more expensive than one for SQL Server 2008 Standard edition. And a license for SQL Server 2008 R2 Enterprise will be about $3800 more expensive than one for SQL Server 2008 Enterprise. A large business could easily swallow these costs, but a small business would have a much tougher time.

Although catering to the enterprise brings Microsoft profit today, you have to wonder what effect this approach will have on its small business customers. Will those customers opt for cheaper open source or new cloud computing options as a way out of dealing with the ever-escalating price and complexity of Microsoft’s product lines? What do you think? Is Microsoft leaving small business behind? Tell us how these changes have affected you at [email protected] or [email protected].