Feeds

Microsoft hears mid-market knocking

Needs to tackle IBM, Oracle, LAMP

  • alert
  • submit to reddit

The Power of One Brief: Top reasons to choose HP BladeSystem

Microsoft is, to borrow a popular Wall St phrase, going "granular" on small and medium businesses (SMBs). The company has begun to focus on the very different needs of companies in the "S" portion and the "M" part of this over-used industry acronym, instead of seeing them at the more abstract level.

The new approach became clear at Microsoft's Worldwide partner conference, where the company has followed the launch of Small Business Server (SBS), with a Windows Server System promotion for mid-market customers.

The offer comprises Microsoft's Windows Server 2003 Standard Edition, Exchange Server 2003 Standard Edition, and Microsoft Operations Manager (MOM) 2005 Workgroup Edition combined with 50 promotional Client Access Licenses (CALs) for Windows Server and Exchange Server.

Microsoft's focus is an attempt to reconcile increased competitive pressures with the opportunity to sell newer, integrated versions of Windows and applications like Office and SharePoint Portal Server to what is a potentially lucrative but highly fragmented and legacy dominated customer base.

That base is running point applications like Excel for their accounting needs, Office 97 for personal productivity, and Windows NT 4.0 or Novell's NetWare on servers.

The target audience in question varies from vendor to vendor. According to Microsoft, mid-market businesses run 25 and 500 PCs - Microsoft says there are 1.2 million of these companies worldwide, representing a sizeable opportunity. That's compared to 40 million organizations running less than 25 PCs and 18,000 with more than 500 machines.

While the numbers may be open to question, what is tangible are the needs of mid market. Like their small business cousins, mid-market operators lack the IT staff needed to administer complex software and often make purchasing decisions in reaction to problems, like buying a new server that features the latest copy of Windows Server when the old machine finally runs out of memory.

Where the mid-market differs from small businesses, though, is that companies will often run multiple copies of different server products, like e-mail or database, and also have distributed branches that require virtualized management.

IBM and Oracle have been targeting these customers in recent years with a series of streamlined, cut-down and low-priced databases and application servers.

Microsoft is also in the early days of experiencing a competitive challenge from the Linux, Apache, MySQL and Perl/Python/PHP (LAMP) stack. LAMP is still regarded by some Microsoft partners as too crudely assembled for mid-market customers, who aren't interested in the bits and bytes debate that dominates the LAMP community and who want integrated products to work out of the box.

As surely as open source has moved from Linux to the application sever, though, open source will evolve into a refined set of low-cost and integrated applications and middleware serving mid market and vertical sector customers. "We are definitely looking at LAMP," Steven VanRoekel director of mid-market solutions, told The Register at Microsoft's partner conference.

Partners are already checking out Linux as a potential platform they could do business on. Ric Opal, vice president of systems integrator and consultant Peters & Associates, is one example of a Microsoft partner who - while deciding against offering products or services on Linux - has at least gone as far as attending classes on Red Hat to get a better understanding of the operating system.

"Integration costs on Linux are more substantial and the application offerings are not there," Opal said of the current state of the Linux market.

Microsoft is in the early stages of addressing the competitive dynamic and market demands, however the company must move quickly in a number of areas. The mid-market server promotion launched last week is a "soft-bundle", meaning the server and management products have not been integrated any more than normal to help with installation or administration. Also the server is not available on an OEM's hardware, which could allow the user to simply un-pack, turn on and boot-up.

While Microsoft can be forgiven for these omissions, as its strategy is new, in the long-term both facts are tactical mistakes that Microsoft must rectify. IBM, for example, is steaming ahead in bundling documentation and information with products that help customers in vertical sectors run its software to suit their sectors' demands.

So far, Microsoft has launched a TechNet web site and book that advises customers about how to install and run the mid-market server. To tackle IBM, Microsoft must develop or partner aggressively to build bundles, especially for verticals, that prescribe how to run and operate this Windows to suite specific sector needs.

VanRoekel did admit the TechNet site and book are the start of a campaign to develop resources tailored to customers with limited resources, and move away form the usual tactic of formulating content and support for product specialists inside of companies.

"We are working to take content from Microsoft and applying the mid market lens to that... [previously] every [Microsoft] product group wrote for the specialists - the e-mail specialist of the database specialist," VanRoekel said.

He added Microsoft is also evaluating whether to further integrate the software in the mid-market server, tailoring the server to mid-market and vertical needs.

What of bundling software with hardware, though? That's a strategy Oracle has followed. "We have been talking to people about that. It does make sense to include and offer that's combined. We are talking very actively to the MBS [Microsoft Business Solutions] team about what makes sense to add," VanRoekel said.

"Maybes" and evaluations are not enough for partners like Opal, though, who want to press ahead. "We fully intend to bundle. We are an HP [Hewlett Packard] reseller. I'm not going to wait for him. I'm going to do it myself," Opal said.

Microsoft is wising up to the opportunities and challenges of the mid market. As a provider of generic platforms, Microsoft is likely to rely on partners to develop customized content, and hardware and software bundles that appeal to these customers. However, a more pronounced lead is vital in content and bundling over the long-term if Microsoft is to truly rally partners to this new found crusade.®

Related stories

Microsoft's Ballmer tells lurvely partners to stick it to IBM
Microsoft looks to partners to force Office upgrades
Microsoft urges partners to make business app run

The Essential Guide to IT Transformation

More from The Register

next story
Secure microkernel that uses maths to be 'bug free' goes open source
Hacker-repelling, drone-protecting code will soon be yours to tweak as you see fit
NO MORE ALL CAPS and other pleasures of Visual Studio 14
Unpicking a packed preview that breaks down ASP.NET
KDE releases ice-cream coloured Plasma 5 just in time for summer
Melty but refreshing - popular rival to Mint's Cinnamon's still a work in progress
Leaked Windows Phone 8.1 Update specs tease details of Nokia's next mobes
New screen sizes, dual SIMs, voice over LTE, and more
Put down that Oracle database patch: It could cost $23,000 per CPU
On-by-default INMEMORY tech a boon for developers ... as long as they can afford it
Another day, another Firefox: Version 31 is upon us ALREADY
Web devs, Mozilla really wants you to like this one
Google shows off new Chrome OS look
Athena springs full-grown from Chromium project's head
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.