Thursday, July 10, 2008

Is the SMB server market shrinking?

This post makes some interesting points about the shrinking market for Microsoft Small Business Server but I don't think those trends will adversely affect the market for Lotus Foundations server. Lets look at the points this blogger makes:

"First, a little background. The VAR Guy spent 2006 and 2007 working for a 15-person company in New York. Aside from a file-and-print server, there wasn’t much need for an on-site email server or database server... With the rise of hosted Exchange, on-demand CRM and even hosted databases, more and more small businesses don’t want the hassle of running and maintaining their own servers..."

Print servers will always stay in-house - what company would route their print jobs via the internet with its attendant data transfer costs and potential delays? So if you're running a local print server anyway, then why pay 'x' dollars per month to outsource day-to-day file storage when you can do it on-site for close to zero incremental cost? Sure, a SMB might stick some special purpose servers into the cloud/net/server farm but there is still a comparative cost advantage in keeping their day-to-day data in-house. So my money is saying that SMB will keep their local computer closet humming for a few years yet and they'll certainly be interested in anything that reduces cost or increases return on their investment in that department. The exception might be when the increasing IT workload requires doubling the IT workforce (from one employee to two) and at that point the SMB might consider outsourcing some tasks rather than employing additional staff.

"Unless you have specific vertical-market apps that you need to run in-house, the time is right for small businesses to start outsourcing as many applications as possible to a service provider. "

I don't think so. When has SMB ever been a trendsetter? Most SMB are too busy earning their daily bread to waste time planning for a transition to the bleeding edge of the technology wave. IMHO SMB keep their current infrastructure and applications until it becomes impossible to maintain (Sorry... I can't sell you XP... you'll have to buy Vista) or an IT vendor can explain an immediate and tangible business benefit to justify the upfront cost (Replacing your modem with cable will cost 'x' dollars in cash but save you 'y' dollars in business efficiency because you can do immediate updates rather than overnight transfers). SMB will invest in different technology, but rarely at the bleeding edge. They prefer a low-risk maturing technology with a large installed base - sounds like a job for Lotus Foundations Server based on the mature Nitix technology.

This other blogger makes a point that Exchange, Dynamics and SharePoint are all available as hosted services, but so what? Microsoft is selling overly complex and expensive drill bits when all the customer wants is holes, and that customer wants those holes to be as inexpensive and uncomplicated as possible. Installing Microsoft SBS 2008 or EBS 2008 means upgrading hardware and that's a potential sticking point for an organisation whose total IT spend (including staff) might be less than $150k per year.

On the other hand a SMB could upgrade to Lotus Foundation Server which will happily run on an existing server with 2GB ram and also provide email, firewall, files sharing, optional print server, web site, Domino applications services plus plus plus

The market for Microsoft's Small Business Server might start shrinking but that's Microsoft's problem - not IBM's.

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