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Microsoft Corp.’s advance into the midsize business market will bring a wealth of opportunity to VARs offering back-end service and solution tools, but licensing may be a dead end for others.

That’s the word from Mika Yamamoto Kramer, an analyst at the Gartner Group following Microsoft’s midsize business developments.

“Microsoft is taking money away from one end and sending it to another,” Kramer said. “They have taken a lot of the complexity out the deployment of applications [in the midsize sector], but they have created a huge opportunity for anyone interested in developing solutions, tools and templates.

“Anyone who sells licenses and walks away could be in trouble,” she added, “but there is going to be a huge need for VARs able and willing to address and design specific solutions for a lot of businesses based on industry, verticals, even employees.”

Saying the midsize market has been neglected, the Redmond, Wash.-based software developer has introduced its next generation of business applications, including Microsoft Dynamic, a role-driven initiative to integrate various business applications across an employee’s field of work, and Centro, a midmarket infrastructure bundle. Both are designed specifically for the market, which Microsoft defines as companies with 50 to 1,000 employees, and a key growth area for the company in coming years.

Click here to read channel reaction to Microsoft Dynamic and Microsoft’s midsize business direction.

The midsize business market consumes vast amounts of technology and is poised to do even more. According to research conducted by AMI, the segment consists of 1.4 million businesses worldwide, with 68 million PCs (49 per company) and 4.8 million servers (three per company). In terms of IT investments, midsize businesses spent $134 billion on software and IT services in 2004, which is expected to grow to $185 billion by 2009.

To ensure its success in the sector, Microsoft would have to develop a completely different channel, Kramer said, designed to cultivate solutions and solution providers.

“They’ve never been involved in selling solutions, because they’ve never had any to sell,” she said. “They now have a tremendous need to build out, and that will require a new breed of channel.”

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