Microsoft targets Linux with server for very small companies

Microsoft Corp. Wednesday announced the 10th member of its Windows Server 2008 family with a new version of the server operating system aimed at companies with fewer than 15 employees.

Windows Server 2008 Foundation is intended for small firms without dedicated IT staff but that want to store files, share printers, host software and serve as Internet gateways.

It will come pre-installed on low-end servers, which have fallen drastically in price in recent years along with other PC hardware.

Hewlett-Packard Co. plans to release a server with Foundation pre-installed for under US$1,000, according to Julius Sinkevicius, director of product management for Windows Server at Microsoft.

Microsoft has sold a Small Business Server product for almost a decade. The latest Windows Server 2008 version supports up to 75 users.

But Microsoft CEO Steve Ballmer argued that there was a need for an even lower-end offering from the software maker.

"If somebody can buy a $500 [hardware] server, they're a little loath to spend $500 for the server operating system that goes with it," Ballmer told analysts in February.

Foundation servers will compete with servers running the free Linux operating system, such as IBM's similarly named Lotus Foundations server appliance.

IBM first announced the for-fee Lotus Foundations product in January 2008. It is also aimed at small businesses. Like Foundation Server, it is being sold primarily through resellers and system integrators.

The difference is that Lotus Foundations comes as an all-in-one appliance, with a number of features and applications pre-installed in addition to Linux. They include Lotus Notes e-mail and collaboration and Symphony productivity software.

Foundation comes alone without any bundled apps.

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In a blog, Bilal Jaffery, a marketing manager for IBM Lotus Foundations, called the new rival product from Microsoft "a strategy to improve the [Microsoft] short term bottom line as it provides nothing new to the market ... That only results in my business partners being able to close more deals by providing more credibility to the Linux revolution."

Sinkevicius said Microsoft will leverage its partner ecosystem to push Windows Server Foundation to more than 40 countries at launch. He also said small businesses don't buy on price or features, but on the line-of-business applications they need to run, of which many more are available on Windows than Linux.

Foundation will also de facto compete for buyers with Microsoft's Small Business Server (SBS).

There are two primary differences between SBS and the new Foundation product. Like Lotus Foundations, SBS ships with an integrated stack of Microsoft software on top, including Exchange Server for e-mail, SharePoint for collaboration and Forefront for security.

That may seem to make SBS, which costs $1,089 excluding hardware, a better deal. However, SBS requires each user to pay a Client Access License (CAL) of $77 to access the operating system and its bundled applications.

No CALs are required with Foundation. However, Microsoft has put in technology that prevents Foundation servers from supporting more than 15 users, Sinkevicius said.

Windows Server Foundation supports most of the features of Windows Server 2008 Standard, as well as all apps certified for that version, Sinkevicius said. The main limitations for Foundation are: one physical CPU (though multiple cores are possible), 8GB of RAM and no Hyper-V virtualization, as well as the limit to 15 users.

Also, Foundation comes only in a 64-bit version. Microsoft has said that all future versions of Windows Server 2008, starting with the R2 edition due later this year or early 2010, will be 64-bit only.

Finally, because Foundation comes pre-installed on servers, companies are not allowed to re-install the operating system on other hardware, even if their original server crashes and dies. Sinkevicius said that is because Foundation server is similar to OEM versions of Vista or XP that come pre-installed on desktop or laptop PCs and cannot be transferred to other hardware.

Foundation Server becomes the tenth member of the Windows Server 2008 family. The other versions range from HPC Server and Datacenter Edition on the high end, to SBS and Essential Business Server on the low end.

Prior to Foundation, EBS was Microsoft's most recent addition, having been launched late last fall.

Microsoft touted EBS, aimed at mid-sized businesses, for a whole year before its launch. With Foundation Server, Microsoft kept it mostly under wraps apart from Ballmer's disclosure to Wall Street in February.