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Microsoft is often cast as a scapegoat, finding itself facing censure for everything from its security to its business practices. But that’s not the case in the SMB (small and midsize business) space, particularly when it comes to Windows Small Business Server 2003.

A recent Yankee Group report shows that the product has taken the sector by storm. More than half of the 500 respondents to a survey by the Yankee Group and Sunbelt Software Inc., a major Microsoft partner, said they use or plan to purchase SBS 2003.

Resellers, meanwhile, are making a tidy business around SBS 2003-related consulting, implementation and support services. “These folks are happy with Microsoft,” says Laura DiDio, Yankee Group’s senior analyst for application infrastructure and software platforms.

“We’re so used to hearing Microsoft being criticized,” DiDio observes. “In fact, they are popular here.”

She adds that SBS 2003 has propelled revenue growth among some resellers by 100 percent and above. Other channel players are gearing up for SBS 2003 sales.

A spokeswoman for Avnet Partner Solutions says the SBS 2003 piece of the company’s software business is growing. “It is in the ramp-up phase and is not yet a dominant portion” of Avnet’s software business, she adds.

Click here to read about Oracle and Dell bundling their wares in pursuit of the SMB market.

SBS 2003, which debuted last October, is a compilation of software that lets small businesses connect to the Internet, collaborate, send/receive faxes and perform other office functions. DiDio says resellers have taken to calling the product “Baby BackOffice.”

Included in the package are Windows Server 2003, Microsoft Exchange Server, Microsoft SQL Server, Microsoft Internet Information Server, Shared Fax Service, Shared Modem Service, Microsoft Front Page and Microsoft Management Console.

This Swiss-army-knife approach has apparently contributed to the product’s success. SMB customers told the Yankee Group that Linux and open-source vendors “have no products that individually or collectively can compete with the bundled feature set of Windows SBS 2003,” according to the Yankee Group.

Microsoft plans to invest $850 million over the next year in its SMB division. Click here to read more.

Its survey noted that 11 percent of the SMB respondents use or plan to buy Linux. Those using Linux typically employ the operating system in Internet gateways or Web servers, the Yankee Group reported. Meanwhile, 3 percent of the SMBs surveyed said they plan to buy Novell Small Business Suite.

Pricing contributes to the SBS appeal. DiDio says SBS makes resellers’ phones ring when tied to a special promotion. She cites the example of a Hewlett-Packard Co. promo in the United Kingdom in which customers can purchase an HP server with SBS 2003 bundled for about 900 pounds (about $1,600). She calls that a “very, very aggressive price point.”

DiDio says HP and Dell are pushing SBS, even as they promote Linux wares.

But it all boils down to what’s selling. And right now, at least among SMBs, what’s selling is Windows. “Where these VARs and consultants and training partners are really seeing big demand is in the Windows market,” DiDio says.

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