Pricing and Licensing for Windows Essential Server Solutions

Today, Microsoft will announce the release of Windows Essential Business Server 2008 release candidate 0 (RC0) and the pending release of Windows Small Business Server (SBS) 2008 RC0. Both products, along with Windows Home Server, are now marketed as part of the same product family, called Windows Essential Server Solutions. More interesting, perhaps, Microsoft will also announce pricing and licensing terms for the new products.

As a refresher, SBS 2008 is, of course, the next-generation version of Microsoft's popular SBS product line. Like its predecessor, it will come in Standard and Premium versions, but there are some differences this time around: The Standard edition includes 64-bit versions of Windows Server 2008 Standard Edition, Windows SharePoint Services (WSS) 3.0, Exchange Server 2007, and Windows Live OneCare for Server, and integration with the Web-based Office Live Small Business services. Premium edition adds a second copy of Server 2008 (either 32-bit or 64-bit, your call) and SQL Server 2008 Standard Edition (again, 32-bit or 64-bit). You may recall that SBS 2003 R2 includes SQL Server 2005 Workgroup Edition, so there's an upgrade there. But also new in SBS 2008 is the fact that the second copy of Windows Server and SQL Server are now licensed to be installed on a second server.

Essential Business Server 2008 is, of course, a new product. Like SBS 2008, it will come in both Standard and Premium versions, though both are 64-bit only. The Standard edition is installed on three separate servers: a management server (Server 2008, System Center Essentials); a messaging server (Server 2008, Exchange 2007, Forefront Security for Exchange), and a security server (Server 2008, Exchange 2007 Edge Services, Forefront Threat Management Gateway (TMG) for Medium Businesses--formerly ISA Server). Premium edition purchasers will need a fourth server, a database server, running Server 2008 and SQL Server 2008 Standard.

In future articles, I will highlight some of the many interesting changes that are coming in these products. Suffice to say, however, that the management tools are becoming more streamlined and feature a common look and feel in all products across the Essential Server Solutions product line. Also, SBS 2008's integration with Office Live Small Business and both products' extensibility to third party solutions, especially security and line of business (LOB) applications, is quite impressive.

This time, however, I'd like to focus on Microsoft's change to the SBS/Essential Business Server 2008 pricing model because I feel this is going to be a source of great confusion for customers. Currently, SBS 2003 R2 is sold under a model where the initial cost of the server is quite low (around $500), but the client access license (CAL) cost can be quite high, especially when you consider that Microsoft offers CALs in packages of five or more: There's no way to buy fewer than five CALs. So a small business with, say, 17 employees would need to buy 20 CALs, "wasting" three and essentially throwing that money away.

There's a secondary cost issue with SBS today. Currently, there's only a single CAL for SBS server. Thus, customers who opt for Standard are essentially paying a higher per-CAL cost even though their clients aren't accessing SQL Server functionality.

Microsoft has addressed both of these issues in SQL Server 2008 (and in Essential Business Server as well, though of course that product is new). But because customers have also demanded the inclusion of the Standard edition of SQL Server instead of the lower-cost Workgroup Edition (real world differences be damned), the starting price for SBS 2008 is higher than that of its predecessor. However, for most SBS 2008 customers, the overall cost of SBS will be lower now than was the case for SBS 2003, thanks to changes in CAL pricing. The line appears to cross at about the 20-user mark and gets more advantageous as you approach the 75-user limit that's still present in SBS 2008.

So let's talk numbers. SBS 2008 Standard with five CALs now costs $1089, up from $599 with SBS 2003. But the Standard CAL cost is now just $77, down from $100, and you can buy CALs one at a time if you'd like. (The standalone costs of the software included with SBS 2008 Standard is about $2033, according to Microsoft, plus $106 per CAL.)

On SBS 2008 Premium, the cost is now $1899 (with five CALs), up from $1299 in SBS 2003. And the new Premium CAL is $189. But under this scheme, only those users who actually need SQL functionality will actually pay for that privilege. (Standalone costs for the products included in SBS 2008 Premium is $4031 plus $258 per CAL.)

Essential Business Server gets similar pricing. Essential Business Server 2008 Standard (with five CALs) costs $5472, compared with a standalone cost of $7799 for the bundled products. An Essential Business Server Standard CAL is $81 (compared with $112 per CAL standalone). Essential Business Server 2008 Premium costs $7163, compared to a standalone cost of $10,213. An Essential Business Server Premium CAL is $195 (compared with $274).

Comparing SBS 2008 and Essential Business Server 2008 to standalone versions of the included software is, of course, a bit unfair, but in a good way. Both products offer a level of integration that is unavailable to the standalone products, and both offer unique centralized management facilities that are also unavailable elsewhere. These are, however, topics for a future conversation.

If you're interested in testing the RC0 version of Essential Business Server 2008, that should become available sometime today. SBS 2008 RC0 will be made available in the coming weeks as well.
http://www.microsoft.com/ebs/