More Money, More Servers
At first glance, Microsoft's price for Small Business Server (SBS) 2008 looks higher than the prices of the current version. But there's much more to Microsoft's SBS 2008 pricing scheme than an apparent price increase. In fact, in some cases, overall costs may stay the same or even decrease.
In a May press release, Microsoft announced the following list prices for SBS 2008 and its new midmarket cousin, Windows Essential Business Server, which are both due out by year's end:
- SBS 2008 Standard Edition, including five client access licenses (CALs): $1,089; additional CALs, $77 each
- SBS 2008 Premium Edition, including five CALs, $1,899; additional CALs,
- Essential Business Server 2008 Standard Edition, including five CALs, $5,472; additional CALs, $81 each
- Essential Business Server 2008 Premium Edition software, including five CALs, $7,163; additional CALs, $195 each
Those numbers represent a big jump from the price of SBS 2003 R2 with five CALs, which Microsoft lists as $599 for the Standard Edition and $1,299 for the Premium Edition. But Microsoft has built new flexibility into how customers can purchase CALs: Customers will be able to purchase single-client access licenses, paying for the exact number of employees using a particular product.
Customers will be able to buy a blend of Standard or Premium CALs, and CALs will be valid for other copies of Windows Server, SQL Server or Exchange Server on the network.
Easing the Pain
All those CAL policies are new.Customers must currently buy five CALs at a time, and users of SBS Premium must buy Premium CALs. "There are some things we've done to the product that have been reflected in the pricing-more cost on server software and less on CALs," says Joel Sider, senior product manager in the Windows Server Solutions Group at Microsoft. Sider noted that customers asked to have the cost of SBS shifted away from licenses and to the software itself.
In addition, SBS 2008 Premium represents a major upgrade. The new Premium edition will include two servers rather than one; it will also include SQL Server 2008. "It's a big addition to Premium, and the price reflects that," Sider says. "On the Premium side of SBS, we've made a lot of changes."
Al Gillen and Raymond Boggs, analysts for research firm IDC, summed up the pricing changes in a May report: "As is often the case in product evolutions, the feature changes and the related pricing changes imply higher costs for end customers," the analysts wrote. "Yet further analysis reveals cases, particularly for the Standard Edition, where customers will find their costs are actually lower, or at worst, relatively unchanged from previous price points they have paid." The two-server Premium Edition involves "generally higher prices, but with the upside of improved functionality for customers," the analysts added.
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But Boggs notes that higher prices may scare away the smallest customers. "For the pure, basic customer just kind of starting out, it's not going to be very attractive," he says. "For the folks that are more advanced, it's going to be more interesting. It's pretty up-market. It's not the truly simple and affordable solution that you -- as a five-person company with one server -- are going to be thinking about. By the same token, we're still talking list prices. There may be some wiggle room for partners."
Microsoft is also building in opportunities for partners to up-sell customers to the Premium edition. SBS 2008 Premium packs a lot of functionality, Boggs says, and he notes that the flexible new CAL policies can take some of the bite out of licensing costs for customers.
"If I move from the old Premium to the new Premium, suddenly I'm getting two servers," Boggs says. "I can extend Basic [CALs] to 80 percent [of users]. There's something of a grow lamp encouraging you to move in that direction."
But the analyst also warns that partners will need to do plenty of explaining to customers around pricing and licensing: "You, as channel partners, are going to be obligated to have a better understanding of the customer's business," he says.