Small Business Server Brings Big Opportunities

Next month, Microsoft is introducing BackOffice Small Business Server (SBS). Aimed at small businesses, this product offers big opportunities for Internet Service Providers (ISPs), independent software vendors (ISVs), Value Added Providers (VAPs), and Microsoft Authorized Technical Education Centers (ATECs).

What Is SBS?
SBS consists of Windows NT Server 4.0 with Service Pack 3 (SP3) and selected BackOffice components configured to meet the needs of small businesses. SBS includes Internet Information Server (IIS) 3.0, Proxy Server 1.0, FrontPage 97, SQL Server 6.5 (with SP3), Exchange Server 5.0 (with SP1), Outlook 97, a fax server, and modem pooling capability. By limiting the size of the BackOffice applications, Microsoft succeeded in tuning these applications to fit the SBS audience's needs. For example, the SBS version of Exchange requires only 7MB of RAM instead of the standard 32MB configuration. Tuning the applications to the audience is a unique benefit that's not ordinarily feasible, because vendors usually can't pinpoint the intended audience.

SBS runs on one Pentium-class server with 64MB of RAM, 4GB of hard disk, and an adaptive modem. You get a 25-computer license for all the software and can handle up to 100 users.

Installation and configuration require one CD-ROM and take about an hour. SBS makes most configuration decisions for you. For example, SBS's Internet connection wizard lets you select from a list of preferred ISPs. Then the wizard asks for a domain name and a credit card, dials the ISP, and configures your domain and network. All your users can now access the Internet. In addition, SBS automatically configures the Exchange Internet connector to dial the ISP once per hour and handle incoming and outgoing email. If you're an SBS-enabled ISP, many potential SBS customers will be able to use your services.

The ISV Opportunity
Although SBS includes SQL Server, no part of SBS requires SQL Server. So why did Microsoft throw in SQL Server? First, including SQL Server will substantially increase SQL Server's market share, which increases the market for third-party SQL-based applications. In addition, making SQL Server part of SBS will block Microsoft's database competitors from penetrating the small business market. Few vendors can afford to give away a 25-user client/server database.

With SQL, IIS, and Exchange on the SBS platform, if ISVs want to reach the small business market, they now have a known platform to integrate their solutions with. By creating SBS versions of their applications, they can offer small businesses database, Web, and messaging capabilities. If an application is built on SBS, software vendors no longer need to add the cost of SQL and Exchange to their solution's cost.

The VAP Opportunity
To install, configure, and support SBS to small business customers, Microsoft has created a new group of partners, called VAPs, which are consultants specializing in Microsoft technology. Already, the VAP program includes 100,000 members, and Microsoft expects 50,000 more to join in the next six months. SBS provides a huge opportunity for VAPs to get their foot in the door with prospective small business customers who don't have Internet connectivity or email. Before SBS, BackOffice required too much configuration or support to make it feasible for small businesses. With SBS, VAPs can offer small businesses the same functionality that was previously available to only mid- and large-sized companies. (For inside details about how VAPs can take advantage of this opportunity, read our new sister publication, Selling NT Solutions. You can subscribe at http://www.sellingnt.com.)

The ATEC Opportunity
To get small business people started with SBS, ATECs are offering VAPs a one-day introductory course for $99. The great opportunity for ATECs is that once VAPs get a quick, inexpensive taste of components such as Exchange and SQL Server, their appetites will be whetted for more. Small business provides a large new group of potential training customers.

It's a Fit
SBS fits perfectly with Microsoft's successful business model of low-price, high-volume software. Many small businesses can benefit from the same level of technology that mid- and large-sized companies enjoy today. At $2000 for SBS running on a $3000 server, the opportunities are big for small business.

End of Article

Mark Smith’s November 1997 editorial, “Small Business Server Brings Big Opportunities,” mentions “a new group of partners...VAPs.” Is this term generic, or is it a new, official partner relationship with Microsoft? I don’t see how any official Microsoft partnering program can have 100,000 members and I haven’t heard of it. I called Microsoft, and no one there could find anything about it. Please clarify.
I’ve been reading PC magazines for 15 years, and yours is one of the two best I’ve read. The other was PC Tech Journal, which I assume is now out of business. 
—Beroset 

Microsoft created the Value Added Providers (VAPs) program about six months ago to promote the new Small Business Server (SBS). You can find the program for VAPs, Direct Access, at http://www.microsoft.com/directaccess. Usually, VAP and Direct Access are referred to at the same time as in the example at http://www.microsoft.com/usa/greatlakes/partner/default.asp.
The term is new, so I can understand why people at Microsoft are unfamiliar with it. Ask them about the Direct Access program, and see if that gets a response. If not, you’re talking to the wrong people.
How do you get 100,000 people in a program? First, you offer them a free beta of SBS (estimated $2000 value) for signing up. Next, you offer them a reseller kit for $249 that includes $14,000 worth of Microsoft software. I’m not sure what Microsoft will do for an encore. Thanks for the kind words about the magazine. 
--Mark Smith

Beroset August 10, 1999

I applied to become a VAP and have not yet received the complete details of the VAP program, an answer about what type of support Microsoft is going to offer, or the VAP Kit. I think that the numbers Mark Smith talked of are inaccurate. 
--Prakash Agrawal, India 

Because SBS is such a new program, Microsoft is rolling out SBS in its most complete form first in the US. Here’s what Microsoft’s Paul Bazley, General Manager of Small Business Marketing and VAP Programs, says: “I’m sorry if you think we’ve been in some way misleading. We need to be much clearer about presenting what are US deliverables (e.g., SBS beta, Microsoft Direct Access Action Pack) and what the local Microsoft subsidiaries (such as Microsoft India) have latitude in providing to their VAPs.” 
--Mark Smith

Prakash Agrawal, India August 10, 1999

I appreciated Mark Smith’s November 1997 editorial, “Small Business Server Brings Big Opportunities.” As a fairly green network administrator, I find your articles to be an invaluable resource.
Mark’s editorial states that although SBS comes with 25-client access licenses, it supports up to 100. Microsoft’s Web site states that 25 is the limit. Am I correct in assuming that because of the scaled-down nature of the BackOffice components they only suggest up to 25 users, and in the real world it can handle only about 100? In that case what are your options once your user base exceeds that limit? Must you scrap SBS and purchase the full-blown components? 
--Van Cahall 

Microsoft responds: “SBS has a 25-user limit, which means that you can connect only 25 workstations to SBS. The systems administrator, however, can set up more than 25 user accounts. We’ve learned that small businesses often have several users share machines, so we support the ability to set up multiple profiles on a workstation. BackOffice SBS comes in a 5-user version for $1499 estimated retail price, or a 25-user version for $2459 estimated retail price.
“Yes, 25 client access licenses is the limit. BackOffice SBS contains full-featured versions of the products. You do not need to scrap SBS and purchase the full-blown components. You can either upgrade to BackOffice 4.0, or we will have a separate package that upgrades from SBS to BackOffice 4.0. If you have a database larger than 1GB, you can upgrade SQL Server. If you need to use the Exchange connectors (for instance, if a large company buys the business and you must integrate Exchange with the enterprise mail system), you can upgrade Exchange Server.” 
--Jonathan Moore 
jmoore@wagged.com

Van Cahall August 10, 1999

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