Small Business Server 2003 Pricing

Next week, Microsoft is scheduled to formerly announce pricing for Small Business Server 2003 and addition of a second product version. (Yesterday, a Microsoft speaker inadvertently pre-announced pricing during a public event.) Small Business Server 2003 will come in a Premium version, which features are similar to its predecessor, for $1,499. A second, Standard, version will sell for $599 without FrontPage 2003, Internet Security and Acceleration (ISA) Server and SQL Server 2000. The prices include five client-access licenses (CALs).

SBS is Microsoft’s integrated server suite for businesses with 75 or less employees. (Please note that I originally wrote and later updated this Weblog entry, as Microsoft increased the number from 50 but without communicating the fact.) The software rolls up Windows Server 2003, Exchange Server 2003 and Windows SharePoint services into one tidy package. In theory, because of the integration, small businesses should be able to set up the software unassisted by a computer technician.

This characteristic and aggressive pricing could appeal to small businesses that do not employ on-site IT staff. In a recent Jupiter Research survey, only 26 percent of small businesses said they employed a person solely responsible for managing technology operations. The number dropped to 10 percent for businesses with less than 10 employees. So, ease of set up could be an appealing feature.

On the other hand, SBS pricing is not as aggressive as it might seem. It’s true that as separate products, the software would cost considerably more than the integrated package. Windows Server 2003 Standard with five licenses sells for around $999 (less through volume licensing). But, based on Jupiter Research’s recent small- and medium-business survey, many SMBs would not likely buy the separate pieces anyway. The real value would come from the integrated package, particularly when comparing Windows Server 2003 Standard for around $1,000 to SBS 2003 for $600.

Still, small businesses must watch for hidden costs. Additional CALs are $99 each. This works out to a hefty price increase for some businesses, as CALs for the older version go for $60 each. I would recommend that businesses interested in the software weigh the value of the integrated package against the extra cost of the CALs.

At the same time, once a small business reaches employee 76, Microsoft requires upgrades to the separate products. Actually, at emplolyee 51, the software delivers a pre-warning about licensing limits. Microsoft will apply what was paid for SBS and additional CALs against the price of the separate components, but that still works out to a sizable IT budget increase beyond 75 employees. Still, this is an improvement, considering the limit was 50 employees in the previous SBS version.

By the way, SBS is a good way for larger SMBs with little on-site IT management to set up server infrastructure. Because of the integration features and built-in set-up tools, a business could use SBS to set up Windows Server, Exchange Server and the other components and then immediately upgrade to the next level. Since Microsoft gives full credit against the separate components, the SMB should lose no money during the transition.

But I have a question for Microsoft: Why not make the separate components as easy to set up and administer as SBS? Wouldn’t larger customers also benefit from these features?

Posted by Joe Wilcox at August 27, 2003 11:55 AM