IBM to Microsoft: It's Small Biz Server War
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News Analysis. The new Foundations appliance takes on Small Business Server 2008; it's Linux versus Windows, baby. |
In the same week, IBM and Microsoft are unleashing new server offerings for small businesses. But their approaches are vastly different. Big Blue has announced a Linux-based server appliance, while Microsoft is releasing Windows-based server software running on third-party servers.
IBM is doing what I've been saying Microsoft should do more of: Software plus hardware plus services. Hardware is the crucially missing component to Microsoft's Software plus Services strategy. Microsoft presumes that partners must do the hardware—that it can't cut them out. IBM's strategy relies heavily on partners, just in a different way.
I'm conceptually impressed with IBM's approach here. I say conceptually, having not used the server appliance. IBM tells a compelling story about the combined benefits of its nearly-new Lotus Foundations Server software and hardware appliance. How those benefits pan out—and how well the server-software-services package competes with Small Business Server 2008—is a story with no ending. Yet.
That said, competitively, Microsoft should watch IBM's small business server appliance package because:
- Office alternative Symphony is bundled along with Lotus Notes.
- IBM cut a virtualization deal with VMware—for businesses needing to run Windows applications.
- A single appliance can be provisioned up to 500 clients, whereas Microsoft's Small Business Server caps at 75 users and Essential Business Server at 300.
- The business model is more subscription-like, which should appeal to channel partners and customers, particularly in these times of economic uncertainty.
- IBM claims low-touch setup and supporting services (such as domain management and ISV software updates); the server software dials up every 12 hours for these.
It's the software plus hardware plus services approach that really differentiates IBM's Foundations appliance—and Microsoft and its partners should really, really learn from Big Blue. Microsoft's longstanding problem is one of shifting relevance—from the on-premise PC or server to the Web browser and off-premise data center. IBM takes a hybrid approach, offering an on-premise product enhanced and extended through Web services. (In fairness, Microsoft offers limited services capabilities with Windows Home Server.)
"Myself and many of the folks from my team actually came from our hosting and software-as-a-service businesses," Caleb Barlow, senior product manager for IBM Lotus Foundations, told me earlier today. He said that IBM is trying to bring "that paradigm into a hybrid scenario." Caleb followed up a Friday briefing with another interview for a podcast.
Domain hosting is one of the service hybrids IBM offers with its Foundations appliance. Caleb explained: "The appliance calls up the hosted service, validates its ownership of a particular domain—say acme.com or something—and then all of the CNAME records, MX records, opening the ports on the firewall, dynamic DNS are all handled automatically." The channel partner, or small business owner, would first point the domain to an IBM DNS server. After that, the process is fairly automatic, Caleb claimed.
"Scenarios like that are how you really marry hosted services and on-premise capabilities to really start and collapse this environment," Caleb said. The approach is more compelling when applied to some emerging markets where, because of bandwidth uncertainties, hosted services are unreliable. "You need an on-premise solution that acts like a hosted service," he emphasized.
Lotus Foundations Server software starts at $849 for five users. Customers can purchase additional client-access licenses, which are remotely provisioned. IBM hasn't released pricing for the new appliance, but a current appliance lists for $2,499. In that scenario, entry-level system would cost at least $3,348. Earlier today, when I asked about pricing, Caleb said under $5,000. IBM didn't provide pricing for additional CALs.
By comparison, Small Business Server 2008 "standard" edition is $1,089 for five users. The "premium" version is $1,899. I'll have more to say about how the products stack up following Microsoft's Small SBS 2008 launch on Nov. 12.
[Please send your tips or rumors to watchtips at live.com].
Comments (27)
Thanks, now I have a alternate source for the following..
NASlite
VMWARE server
Ubuntu Server
NoMachine NX
OpenFire IM
etc...
D.
Posted by DOUGman | November 10, 2008 7:35 PM
"If people had understood how patents would be granted when most of today's ideas were invented and had taken out patents, the industry would be at a complete standstill today... A future start-up with no patents of its own will be forced to pay whatever price the giants choose to impose."
-- Bill Gates, 1991
Posted by Bill Gates, on patents | November 10, 2008 8:48 PM
Perhaps IBM bundles with hardware because there's no way they could convince OEMs to sell their software, the way many OEMs sell servers pre-loaded with Microsoft's Small Business Server.
And think of the cheaper price as a bribe to try to convince businesses to run something other than Microsoft Office. Good luck with that.
Posted by Larry Seltzer | November 10, 2008 9:49 PM
The way I see it, IBM seems to be getting a lot more right these days than Microsoft. There's a good chance that settling on nitix will be better for small business than the current MS alternatives.
Plus... There was no way we were going to waste any more money on MS Office. Not now that they've abandoned the standard file format and macros.
Posted by Gavin Bollard | November 11, 2008 1:41 AM
If Microsoft has perception problems as far as it's company is concerned, then IBM has a perception DISASTER as far as Lotus is concerned.
I think a push into small business would have been the perfect opportunity to rebrand the same technology under a new name that has no baggage.
IBM Bluehouse is a good example of a lot of Lotus technology + new stuff delivered in a new way under a new and fresh name.
But with the Lotus brand in small business i sadly see little hope of much penetration into the market.
Btw, i'm one of the ppl that think this perception is undeserved.
Posted by whatever | November 11, 2008 4:41 AM
Right...
I can't see the smaller businesses going for this...sure, the up front costs are smaller, but who are they going to get to support it when something goes wrong? And I don't care what OS/ISV you use, something always goes wrong...
Not enough momentum for me to experiment with this.
Posted by smbsupport | November 11, 2008 8:00 AM
Quickbooks Enterprise 9 killed off support for my Windows 2000 AD server. I refuse to upgrade to MS latest server because it's just not right to be forced to upgrade.
Fortunately QB Enterprise now supports Linux as a server. So this effectively speeds up my conversion to a total Linux server room. So I guess Linux is winning the war.
If Quickbooks did not support Linux, I would be dropping QB like a hot potato. And if it does not work on Linux to my liking I will still be moving on to a different accounting package.
I am sick of proprietary software forcing me to spend money where I am not ready to spend money. I am now regretting my move to QB. I would recommend anyone considering QB to look elsewhere for their accounting solution.
Linux 1, Microsoft 0.
Posted by Bil Brock | November 11, 2008 9:34 AM
Hey.. whatever, we know who you are
Posted by Not so smart | November 11, 2008 10:11 AM
i see a future with a similar offering coming from google than the one from ibm whit local google apps tied whit the cloud
Posted by fede | November 11, 2008 10:25 AM
I've been a Lotus Foundations partner for a couple of months and I absolutely love this thing. So if you are in the partner community, here is the inside secret to get one at a huge discount. If you sign up as a partner they have a not for retail program. I picked up one of these (hardware and software)at a huge discount as long as I don't resell it.
Check it out www.lotusfoundations.com
Posted by I love this thing | November 11, 2008 10:26 AM
Impressive. It offers another supported solution in this space with far more than what Microsoft is offering.
It is supported through a business partner community. Just check out lotusfoundations.com
Posted by Bill Jef | November 11, 2008 10:28 AM
Finally, a Microsoft Killer!!! Its Del.icio.us, I digg it!!!
Posted by Boyd Carter | November 11, 2008 1:42 PM
I would love to get this server so I could format it install and test Windows Server 2008 R2 with HyperV. :)
Posted by Andre Da Costa | November 11, 2008 5:56 PM
@Andre
Very nice, Im sure you would.
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Only two MS products mentioned in your post this time? no mention of the "feature rich" or "maturing" words that you love so much?
Andre, Im disappointed in you, Ive missed you and expected your returning post to be far better.
Posted by Goblin | November 11, 2008 6:19 PM
@Andre
It seems your nose is getting browner everyday LOL
Posted by Microshaft | November 11, 2008 7:19 PM
@Microshaft
I think MS would probably want to distance themselves from him and his obvious style of posting, hes not exactly subtle is he?
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Maybe his new tactic is to make comments and encourage people to insult him. Then he can be a Microsoft Martyr. Thats got to be worth at least 1 laptop surely? and with xmas around the corner he may get xmas lunch around Ballmers.
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Unfortunately for him, we all think Andre is great and this place wouldnt be the same without him.
Posted by Goblin | November 11, 2008 7:28 PM
"Not so smart :
Hey.. whatever, we know who you are"
Umm ok..? What do you mean to say by that?
I know who i am too... wheee! :D
Posted by whatever | November 11, 2008 8:46 PM
This is why MS is today the Old IBM. MS will be not waking up until Ballmer could understand this:
"He questioned Google's ability to make money with Android. "I don't really understand their strategy. Maybe somebody else does"
------------------
Posted by Marco | November 11, 2008 9:37 PM
@Goblin, I guess Andre doesn't know how to partition a hard drive to have BOTH systems running. Guess his install wizard doesn't offer much choice does it?
I thought he'd like to run Hyper V on something more interesting than Vista. Guess I was wrong.
Posted by Gerardo Tasistro | November 11, 2008 9:41 PM
Gerardo, with Hyper-V, I wouldn't need to partition the hard disk to run additional operating systems. Since the CPU already supports hardware virtualization, I can install other OS's in the Hyper-V VM manager. Learn about something before you jump to conclusions. Also, Windows Server 2008 and R2 does not force it on you, once you have the NOS setup as a Domain Controller you can simply install the Hyper V role and begin creating virtual machines right there. There is no over head or unused resources, just the features you need when you want them. Windows Server 2008 customers can even start using Hyper-V now by downloading it for free from the Windows Server website.
Oh, forgot, there no such flexibility, power and agility in the world of Linux and Mac OS X. ;)
Posted by Andre Da Costa | November 12, 2008 8:18 AM
@Andre, I'm quite aware you can setup a virtual hard drive to host an OS in Hyper-V. But I figure it is quicker to resize a partition and install Windows side by side than wipe the disk, install Windows and then install this OS again. Particularly if you're not familiar with the new OS setup process.
That way you end up with the best of both worlds. A short setup process (you only install Windows). A factory setup OS ready to use that can run in a VM or stand alone. And you can still host virtual drives with your own installs of Lotus Foundations to test out personalized setups.
What do you mean by lack of such flexibility, power and agility in Linux?
Posted by Gerardo Tasistro | November 12, 2008 9:55 AM
I have sold Nitix / IBM Lotus foundations for 4 years. Their support is great and **FREE** to partners, their hardware is ok. I never used the old Nitix boxes because of an intense hatred of AMD. My custom built white boxes (which are still supported for IBM Lotus Foundations) run great, and the systems are stable. I have to reboot each server about once a year or 18 months. The interface and admin areas are stupid proof, and do almost everything a SBS server does (except you can't install other apps). I also sell Microsoft servers, and am happy to offer my clients either solution, but push them toward the linux server for stability, cost, and upkeep, and (selfishly) renewable software maintenance fees.
Posted by John Rivers | November 12, 2008 12:36 PM
Quote Andre "Oh, forgot, there no such flexibility, power and agility in the world of Linux and Mac OS X. ;)"
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Yep, youre right there Andre. Thats why Windows servers are so popular !(?)
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Quote Gerado "What do you mean by lack of such flexibility, power and agility in Linux? "
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I wouldnt bother asking. Andre never answers the difficult questions, and I dont think MS will have given him a PR sheet to cover that one.
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Im not going to argue with Andre, Ive only been coming to this site for a few months, and its very obvious (as pointed out by others) that Andre is 100% MS through and through. You cannot expect an honest answer, infact you are lucky to get an answer at all and if you do it will fudge around the facts. Theres about 10 questions still awaiting Andres response, he wont answer.
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Andre is always flogging a dead horse, as even on this thread (like all others) theres a majority of anti-MS posters. Would you like to comment Andre Da Co$ta on, "I refuse to upgrade to MS latest server because it's just not right to be forced to upgrade."
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Come on Andre, if you want that Xmas lunch at Ballmers youre going to have to work harder. Jess is better at this than you (and you can have a sensible discussion with them), my monies on Jess getting the invite.
Posted by Goblin | November 12, 2008 4:27 PM
"I love this thing" - can you tell me more about the NFR deals?
I really like this concept, and with IBM backing it, it has a much better chance of succeeding than it would have otherwise. Hopefully there will be a way to add Blackberry BPS/BES to it.
Posted by Fredrik Nyman | November 13, 2008 5:40 PM
IBM has always been a supplier for big players. I'm glad to see them focused on the LITTLE PLAYERS. That is the way of the future.
Way to go IBM.
Posted by Ash | November 14, 2008 12:58 AM
Fredrik Nyman, please contact me at IBM to discuss NFRs.
drewd@ca.ibm.com
Posted by Drew Donmoyer | January 27, 2009 11:32 AM
Lots of information for you on the IBM Lotus Foundations Wiki
Posted by Jennifer Bloom | February 2, 2009 8:50 PM