Microsoft on the Hunt for SMBs

Microsoft is moving to make its software more attractive to smaller and medium-sized businesses, providing better pricing, easier licensing and resources to help partners focus on the smaller market that currently represents the biggest growth.

Analysts indicated Microsoft, fighting older versions of its own software as much or more than other vendor products, is among the majority of IT sellers adapting to a changing market in which Fortune 500 customers do not represent as much opportunity as smaller, faster-moving businesses.

“The bottom line here is, Microsoft has seen the fundamental switch in the market in both buying patterns and overall economic landscape,” Yankee Group Senior Analyst Laura DiDio told the E-Commerce Times. “They are moving aggressively and swiftly to change and adapt their sales and licensing structures to meet the changing needs of customers and the market.”

Smaller Player Package

Microsoft was expected this week to introduce a server software package for the mid-market, which the software giant describes as companies with 25-500 PCs, at its Business Summit 2005, Microsoft’s first-ever event specifically for mid-size businesses.

Dubbed “Centro,” the server software is anticipated to include Windows Server, Exchange e-mail server, and management software, all priced and licensed to attract smaller organizations.

Partners such as CA Software also announced accompanying software, packages and services, with CA announcing a “protection suite” that goes along with Microsoft’s mid-market server.

“CA is supporting Microsoft’s initiative and extending our presence in this market by providing these companies with comprehensive data protection in a way that addresses both their budget constraints and their limited IT staff resources,” said a statement from CA Senior Vice President of SMB product development David Luft.

Hard to Pass Up

Yankee Group’s DiDio said Microsoft’s latest attempt to connect with smaller organizations was its most forceful yet, and she highlighted the groundwork laid for the latest strategy in Microsoft Server 2003.

DiDio said that, with Microsoft’s SQL Server, Exchange, Internet security and acceleration software, management tools, Windows, Power Point and more, the package was “a really economical bundle.”

The analyst said the smaller organizations Microsoft and its partners are targeting are not as conservative as larger enterprises, and while they expect value for their dollar, they also move quickly on good offers.

“Because they don’t have the sheer physical infrastructure, they move more quickly,” she said. “Because of that fluidity, they’re very likely to move very quickly on a good deal when they see it, and not pass it up.”

Smaller Gets Bigger

Gartner research vice president Martin Reynolds told The E-Commerce Times that the small and mid-size business IT market is among the only growing opportunities for vendors.

“That’s pretty much the only growth left, other than notebooks,” Reynolds said, explaining that the larger enterprise market has become somewhat saturated.

The analyst indicated that most hardware and software vendors are focusing more on the smaller markets, which also carry new opportunities for service and other after-market profits.

“Everybody’s after it,” he said.