Win Server 2008 Foundation -- Conquering One SMB at a Time

Consumers have increasingly flocked to buy low-end, low-cost netbook computers, and small businesses are also attracted to the cheap server hardware now available. "... if someone can buy a $500 server, they're a little loath to spend $500 for the server operating system that goes with it," Steve Ballmer, Microsoft's CEO, said when the product was announced back in April. "So we have something that's akin to a netbook at the server level, and [for that hardware] we'll be introducing our Foundation edition."

Microsoft's low-end, low-cost version of Windows Server 2008 is a new weapon in the fight to keep small businesses within the Windows fold. Its latest battle is with Ubuntu and other Linux server distributions that SMBs are using in increasing numbers.

And indeed, in June, Microsoft did.

In fact, Foundation isn't sold as a stand-alone product: It comes preinstalled on low-cost servers from Dell, HP and IBM, adding about $150 — $200 to the price of server systems with a sub-$1000 price tag.

So what does Foundation do? The OS is targeted at smaller businesses than Microsoft's Small Business Server (SBS), and doesn't include email and other services found on SBS. But it supplies basic services like file and print that many organizations use a Linux server to provide, as well as functioning as an Active Directory server or domain controller and providing network services such as DHCP and DNS. It can also run Microsoft's IIS web server and applications like SQL Server, and offer Terminal Services and remote access.

The biggest and most notable limitation of Foundation compared to other versions of Server 2008 is that Hyper-V, Microsoft's virtualization system is not included. It comes standard in other versions.

Reflecting its low-end target market, Foundation supports a maximum of 15 users without the need to purchase Windows CALs. (Terminal Services and Rights Management CALs are required when the server provides those services, however.) The software runs only on single socket hardware (though multiple cores are allowed) with a maximum 8Gb of RAM.

How is Foundation faring?

The big question of whether Foundation will appeal to potential customers remains. Some of these will be small organizations with fairly simple needs that are unwilling to pay for the more complex SBS — either because it is to expensive, or because they don't need many of the services SBS offers — but which would like to implement a Microsoft-based infrastructure and run Windows applications.

At the even lower end are companies with yet simpler needs: a web server perhaps, or a simple file and print server. This sort of organization is now offered a choice between the low-cost Microsoft server or a free Linux-based server. To fans of open source software this sounds like a no-brainer: Why pay Microsoft for server software when you can get as good, or better, software free?

But in reality things are not quite so simple. Many small businesses don't have IT expertise in-house, so they'd still be paying an outside company to set up a server of any type, plus a monthly fee for maintenance. A Windows server looks and feels familiar, and many organizations would therefore be far more confident adding a Foundation box to their infrastructure than a Linux one. The one-off cost of a couple of hundred dollars for the Foundation software is not a significant extra outlay.

But its the companies that provide IT support to small businesses to which Microsoft is really pitching Foundation as an alternative so Linux, argues Butler Group analyst Roy Illsley. "These companies can now sell a familiar product — Windows Server — and still make a decent margin because they only have to pay for the Foundation edition rather than the full Server 2008 edition. So this is Microsoft recognizing that service companies are getting sensitive to price when comparing Windows to Linux, which they can get for free. It could be dangerous for Microsoft if people get used to Linux, and in today's tricky economy, this is Microsoft's response to Linux and the threat that Linux poses to Microsoft's market share."

It's interesting that Microsoft chose "Foundation" as the name of this edition of Server 2008 because it is very similar to IBM's Lotus Foundations Appliance Server. This Linux-based device offers file and print services, as well as e-mail, contacts and calendaring, remote access, security features and backup on an appliance designed to be self-managing and suitable for companies without onsite IT expertise.

Windows Server Foundation began shipping in early June. It remains to be seen if this defensive product release can do enough to prevent cash-strapped small businesses from looking beyond Microsoft-based servers and discovering the world of open source.

Paul Rubens is a journalist based in Marlow on Thames, England. He has been programming, tinkering and generally sitting in front of computer screens since his first encounter with a DEC PDP-11 in 1979.

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This article was originally published on Aug 18, 2009
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