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Microsoft Offers Deal for Midmarket Customers

It's no secret that Microsoft is eager to increase its midmarket sales. On Thursday, Microsoft launched one of its first specific initiatives in the space with a discounted, three-server solution that it will rely on partners to deliver.

A senior Microsoft product marketing executive describes the program, the Windows Server System promotion for midsized businesses, as laying the necessary foundation to transform mid-sized companies from practicing reactive IT to driving the kind of business value with their IT infrastructures that is more commonly found in enterprise deployments.

For Microsoft, the term mid-market generally refers to organizations with between 26 and 500 PCs. The smallest of those organizations tend to have no dedicated IT staff, while the largest might typically involve an IT department of five to seven people. IT workers in those kinds of positions have wide-ranging responsibilities and little time to delve in-depth into any one technology area, such as e-mail or infrastructure.

The new Windows Server System for midsized businesses promotion doesn't target the entire market that Microsoft defines as midsized, instead focusing on the band of customers with 50-250 PCs deployed.

"We're scoping it above Small Business Server," says Steven VanRoekel, director of Mid-Market Solutions in the Windows Server Group. Although Windows Small Business Server 2003 technically supports organizations with up to 75 PCs, Microsoft views the single-server product's sweet spot as organizations with 50 or fewer PCs.

Timing the announcement of the program the day before the Microsoft Worldwide Partner Conference in Minneapolis begins Friday is intentional; Microsoft clearly hopes partners will carry the water on this initiative. "These are customers that we literally don't call on directly," VanRoekel says. "We have one-to-many events for them, but we rely on partners to call them."

Microsoft admits it hasn't previously given partners any turnkey packages to help crack this customer set. The company's focus has been on enterprises -- defined as companies with more than 500 PCs. At the other end, Microsoft has more recently invested in Windows Small Business Server for the smallest organizations, generally without any IT staff at all. In between has been a gray area.

"Partners have kind of a fine line drawn as where they would sell Small Business Server, and above that, they're talking about a bunch of products," VanRoekel says. To name just a few products and technologies that partners currently must advocate and sell in the midmarket, Van Roekel ticks off Windows Server, Exchange Server, Active Directory and Group Policy.

The new promotion is a bundle of three copies of Windows Server 2003, Standard Edition; a copy of Exchange Server 2003, Standard Edition; a copy of Microsoft Operations Manager 2005, Workgroup Edition; and 50 special combination Client Access Licenses that include rights for both Windows and Exchange.

It's priced 20 percent lower than Open pricing under Microsoft Volume Licensing -- the whole package costs $6,400 and additional CALs cost $76 each. "It's a better price than those customers have ever seen," VanRoekel asserts.

The relative simplicity and price won't sell the product by itself, VanRoekel acknowledges. "We just can't take a three-server solution like this, and just place it in the market." Microsoft will rely on partners and some new documentation and tools [See related story] to help customers make sense of the package.

In its research, Microsoft has found that IT staffers in the 50-250 PC range tend to see their workday eaten by manual patching of desktops and servers, helpdesk duties and maintaining the security and availability of e-mail. Microsoft hopes to change the dynamic, helping those small departments become more proactive by bundling and integrating MOM 2005 into the package.

"Most, if not all of these customers, do not run management technologies," VanRoekel says. "[Having MOM 2005 on site] will be a change. We hope it sends the right message that management technologies are a good thing."

In the end, Microsoft is hoping the Windows Server System will provide an infrastructural foundation that will spur more proactive computing by the customers and higher-level opportunities for Microsoft partners to focus on developing and selling solutions that enhance business value rather than just trying to help organizations navigate daily infrastructure problems.

"You need this foundation to enable advanced scenarios. It starts with Windows Server," says VanRoekel. In the near future, Microsoft will follow with add-on initiatives for the midmarket from the Windows client team, the SQL Server team and other product groups. "You're going to see a big push."

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.