Hallberg defends the claims about the size of the Spiceworks community, stating that the users are mostly small MSPs and IT consultants that cannot afford the licensing fees of the Kaseyas and Level Platforms of the world. While some Spiceworks users are companies with as many 50 or more employees, he says most of the Spiceworks’ base comprises one- to three-employee companies.

“These aren’t the guys that will show up on the VAR 500 or the MSP 250,” Hallberg says. “You’ve got a lot of people flying under the radar that don’t go to the Gartner or InterOp events.”

By some estimates, less than 10 percent of the deployed devices in the market are under MSP management. According to the Channel Insider 2009 Market Pulse Report, 48 percent of solution providers are delivering some form of managed service. Analyst estimates put managed services penetration in the channel between 40 percent and 60 percent.

A free, advertising-supported tool set for MSPs is a relatively unique offering, and conceivably appealing to small VARs and solution providers trying to break into the managed services market. In the general MSP community lingers a debate over what actually constitutes a managed service. Some people say solution providers that enhance their break/fix business with rudimentary remote maintenance tools, such as PC Anyware and Citrix’s GoToMyPC, are not true managed services. Detractors of the Spiceworks claims say many of its users could fall into this category.

Hallberg says Spiceworks’ founding principle of helping IT professionals simplify their lives through applications that provide “just enough” functionality is very appealing to the small MSP. In many cases, he says, the tools marketed by RMM and PSA vendors have features and capabilities that the average MSP will never use, but are forced to pay for. With Spiceworks, he says, MSPs won’t get everything possible, but will get enough to run a managed services practice.

“You go broad and offer enough across each category that you’re going to satisfy most of the market,” Hallberg says.

The Spiceworks platform provides functions such as network discovery and inventory management, utilization monitory, Microsoft Exchange Server health monitoring, help desk ticketing and job tracking, and other features. Spiceworks also boasts that MSPs are able to market their services to the general end-user community, making it easier for MSPs to grow their businesses.

“One of the best things about the Spiceworks IT Desktop is it doesn’t require a lot of convincing to get an MSP or their clients to adopt it,” said Mike Mullen, president of Premier Technology Services, in a statement. “It’s a powerful IT management tool and it’s free—no matter how many companies or devices you want to manage. With the added benefit of the Spiceworks community, we can collaborate and partner with other service providers and market our offerings to a greater number of small businesses worldwide.”

Free software for business-to-business use is a growing concept. AOL was among the first in the late 1990s to support services and applications for users with Web advertising revenue. Yahoo, Google and Microsoft have provided end users with free applications and e-mail supported by commercial ads. And a number of vendors are now exploring free business-class services that are supported by advertising.

Spiceworks sports display ads by Zenith InfoTech, IBM, eSET, CDW and VeriSign.

Free is a great selling point, especially to cash-strapped businesses. But the advertising-based application does have its shortcomings, detractors say. Setting up an MSP business on tools provided by a company that’s totally dependent upon the marketing dollars of other companies is risky. MSPs signing up with Spiceworks could find themselves trapped if the advertising dollars dry up and the company is forced to start charging for the tools.

“I’d be wary of any model that’s based on an advertising model. People are pulling back on advertising, not adding more,” says Jim Alves, executive vice president of product marketing at Kaseya.