It’s a pricing problem, not a technology one

To everyone posting on the SBS blog that you’ve done with Microsoft because the next version of their SMB server doesn’t have Exchange… with all due respect we need to get Exchange and SharePoint off of our domain controller.

The problem is not the technology these days, as we have ways to virtualize … what I need help from YOU on is making sure Microsoft understands that it’s pricing and licensing  they need to work on.

http://blogs.technet.com/b/sbs/archive/2012/07/11/download-the-beta-release-of-windows-server-2012-essentials-today.aspx

We can get a SBSlike server with Exchange on a second server instance to make a heck of a lot more robust box.  Honey if I can install Exchange … anyone can… what we need to hear from the folks at Microsoft is their pricing plans. 

So send those cards and letters (or these days emails) to steveb@microsoft.com, kevin.turner@microsoft.com and cc kbeares@microsoft.com

I am TIRED of scraping servers out of the forums after patch Tuesday.  I want to have SMB servers that I don’t cringe over each Patch Tuesday.  And the way we do that is to do things smarter, with virtualization and instances, rather than everthing smooshed on one box.

We can do this… but we need Microsoft to understand that it’s the pricing bundle that I still haven’t heard warm fuzzies about.  So kick those beancounters up there in Redmond to the curb and let’s make sure Redmond hears that we need a pricing bundle.

18 Thoughts on “It’s a pricing problem, not a technology one

  1. Short comment this time, Susan: Very good post!

  2. David on July 13, 2012 at 7:03 am said:

    First, Susan thanks for the time you put into creating the demo during the recent Third Tier session. It really helped to see Essentials.

    I don’t follow much besides the sbs listsrv and a few blogs like this one. (They serve as my filters for important news.) It seems to be relatively quiet to me. Far fewer comments that what might have been expected.

    I, for one, am not leaving MS. But will the patching problems go away, or at least be significantly reduced by this? I wonder.

    Also, doesn’t it seem counter-intuitive to possibly complicate the setup and maintenance of a small business server? Why not come up with an Exchange-Lite, etc. that works well with other products on one server? Why not fix the problem of complex interactions at the application level, rather than force a virtual server solution?

    Yes, the problem remains more on the unbundled licensing costs. I hope that Microsoft comes up with a transition plan to handle this. (Yes, I did write to SteveB.)

    I wonder if this is just part of the trend to the cloud. A stepping stone to “Windows 365″, and then who will need a server on premise at all? Just hook your systems directly to the cloud vendors.

    Interesting times.

    Thanks,

  3. Bill V on July 13, 2012 at 7:06 am said:

    Susan… Perhaps the media should get wind of this. We can rant and rave as much as we want, although I doubt the ears at Microsoft will listen. However, with the economy as it is, letting the media know that small businesses will be burdened with higher costs due to this change at Microsoft, perhaps that will get their attention.

    Thanks,
    BV

  4. Anon on July 13, 2012 at 7:31 am said:

    What about added setup and deployment costs? Added support costs?

  5. Anon on July 13, 2012 at 7:31 am said:

    What about added setup and deployment costs? Added support costs?

  6. Pete P on July 13, 2012 at 7:54 am said:

    Susan has a point. As each days passes since Microsoft’s announcement about dropping SBS, I’ve been coming to terms with their decision…from only a technical point of few though. I dove in to start learning Windows Server 2012 and Windows Server 2012 Essential. I setup a Hyper-V host with Essentials in one VM and Exchange in another. However, the cost is implement Essentials with on-premises Exchange compared to SBS will be staggering due to the additional licensing, beefier server hardware (maybe) and the biggest cost…labor to implement. I haven’t even considered WSUS and SharePoint yet. Further, Microsoft’s “make-good” on SBS licenses with Software Assurance is only Windows Server 2012 Standard and Exchange. No Essentials. This leave customers without RDS/RDP, the SBS-like console, etc. Microsoft needs to include Windows Server 2012 Essential with the SA entitlement to give customers everything they already have and use in SBS.

    Write to the three contacts as Susan mentioned. I did. I even received a response and Microsoft wishes to speak with me. Also voice the $1,850 annual fee for the Small Business Competency is out of line compared to $329 for the Action Pack requirement for SBSC that we’re used to.

  7. RandyS on July 13, 2012 at 9:05 am said:

    True, dat.

    This whole kerfuffle over SBS vs. Essentials really does boil down to pricing.

    If MS looked at what they were attempting to do with EBS (and honestly, they over engineered it with up to four required servers before virtualization was in vogue), they could offer a special SKU for Essentials Exchange and Exchange CALs, or even a bundle of all included CALs like they did with SBS. They could call it Windows Server 2012 Expanded…

    If I was king, I would top it out at either 200 or 250. I don’t think that changing prices or bundles in this space would affect the buying decisions of any enterprise above 250 seats, but the under 250 market is wide open.

    I will say this, if MS thinks that everyone will run over to Office 365 to replace their on-prem Exchange, they have another think coming.

    Allowing SMB partners to re-bundle Exchange at a decent price would go a LONG way to keeping existing users under the Microsoft big top.

  8. As always Susan, Spot On! but I would go a bit further, I want SKU’s that reflect the SMBC’s that we support, from On-Premise to Hybrid I want to be able to up sell (or Down sell) and give a wide range of options AT a very competitive price.

  9. SPLA on July 13, 2012 at 1:14 pm said:

    SBS is currently available on SPLA. I’m hoping for a return of an EBS-like SAL (SALs are CALs in SPLA-land) so that Windows+Exchange+SQL+Sharepoint can be offered at a lower price point for <250 seats, but failing that…

    Replacing SBS Standard
    with Windows Standard + Exchange = 41% more expensive per user
    with Windows Standard + Windows Essentials + Exchange = 93% more expensive per user
    with Windows Standard + Exchange + Sharepoint = 111% more expensive per user
    with Windows Standard + Windows Essentials + Exchange + Sharepoint = 163% more expensive per user

    (based on the current SPLA price list)

    If you are a MS partner who sells, sets up, and maintains SBS to your customers, or if you are an end-user of SBS obtained through such a partner, I would strongly recommend you look into SPLA licensing.

    SPLA is the only way to “rent” Microsoft software. Anybody who provides hosted services running on Microsoft software has to use SPLA.

    Now, as an end user, SPLA has the following advantages:

    * if you ever upgrade (hardware or software) and your partner passes the savings on to you, SPLA is usually the cheapest way to get a license (bar OEM)
    * you can increase/decrease the number of users on a monthly basis
    * Exchange, Sharepoint, SQL are licensed on a per-user basis – there is no per-server license (but Windows and SQL have per-processor license options that give unlimited users)
    * swap SQL and Windows between per-user and per-processor licenses whenever it makes economic sense

    And the following disadvantages:

    * your SPLA partner has to own the hardware
    * you have to pay monthly – you never have a perpetual license

    If you are the MS partner, you can:

    * offer on-premise, cloud, hybrid – so long as you own the hardware
    * compete on price with volume licensing and FPP and still have some margin
    * Microsoft can only increase prices every January
    * host several customers on one box and use Datacenter for big savings (no per-user/per-vm windows licensing)

  10. Joe Raby on July 13, 2012 at 2:01 pm said:

    WHS is going to be in the OEM embedded channel until 2025.

    Is Exchange available as an embedded product?

    If so, why couldn’t Microsoft just release SBS Standard as an OEM embedded product? You’d get long-term support and would be able to turn it into an email appliance. Isn’t that what consultants really want anyway?

    Here’s another question: if you could still buy SBS Standard 2011 in the OEM embedded channel and can get updates until 2020+, isn’t that enough time to deal with Internet connectivity and security challenges? We should be asking Microsoft for this option, since Exchange 2010 RTM has a lifecycle to 2020 and Windows Server 2008 R2 is available in the embedded channel already.

  11. Joe Raby on July 13, 2012 at 4:34 pm said:

    Your pricing is wrong.

    How is SharePoint more expensive than SBS Standard, when SBS Standard only includes the free SharePoint Foundation Services?

    You can download SFS for free for any Windows Server installation.

    SBS Standard doesn’t include SharePoint Portal Server. If you want that, you’re talking about installing it on a separate box(es) anyway, so you’d have to put in the cost of at least one more Windows Server Standard license, or run it in a separate VM instance in WS2012. You’d probably want a full SQL Server install for a deployment of that level too though, which puts you into enterprise pricing level which is outside of the scope of small businesses.

  12. SPLA on July 13, 2012 at 7:16 pm said:

    Pricing is right, just I forgot that SBS uses free version of Sharepoint. Those prices are correct if you want Sharepoint Standard; I guess most SBS’ers don’t (I hardly use sharepoint, I must confess!)

    As for extra Windows licences – no. Under SPLA per-user licensing, you don’t need a seperate server license. E.G. You could have 25 user SALs and it will cost you the same whether you have one Windows Server instance or fifty. Or you can license Windows Server per-processor, and have unlimited users for your 2 instances (standard) or unlimited instances and unlimited users (datacenter, which is big money).

  13. Killer B on July 14, 2012 at 12:00 am said:

    Over time, Microsoft seemed to have been slowly killing off SBS:

    SBS 2000 seemed to have the best package of products: OS, Exchange, ISA, SQL, Terminal Services

    SBS 2003 separated ISA and SQL into a Premium offering, reducing the standard offering to just the OS and Exchange (Terminal Services was removed…can’t blame them since having end users remote into your domain controller is A Very Bad Thing). I’m not counting WSUS and Sharepoint since they’re both free.

    SBS 2008: bye bye ISA. Premium offering is nice with the extra server license and SQL (and the second box can be used as a Terminal Server), but the CALs are much more expensive overall. So really, the standard product is, again, the OS and Exchange (WSUS and Sharepoint are free, so they don’t count)

    SBS 2011 (Standard): Same as 2008.

    So now that Microsoft is pushing SMBs to hosted Exchange, they figure now is the time to put the death knell in the product itself…

  14. Joe Raby on July 14, 2012 at 10:39 am said:

    That’s interesting, but I don’t see how renting software perpetually is going to save a customer money over a hardware purchase. If it’s on-premise, how is a consultant going to decide who’s premises it’ll reside at if you want to do multi-tenant hosting? If you do set up multi-tenancy, then you’re faced with the downsides of cloud computing for those tenants that aren’t there. A lot of SBS customers are trying to get stable platforms that last a long time without massive updates. Many boxes are lasting for well over 5 years without needing product upgrades, so they can own their hardware faster. Not every small business is incorporated either, so OpEx spending doesn’t make any sense over saving money through ownership. OpEx only really makes sense if a) you can’t afford any CapEx, or b) you want to impress investors and shareholders.

  15. Peter MacEwen on July 18, 2012 at 9:33 am said:

    Selling SBS has always been about the bundling, being able to give my small customers what the big boys work with. It has worked reasonably well for us over the years going from the NT4 versions to the latest 2011.

    The challenge for us with the way Microsoft looks to be selling SBS 2012 is how to give our customers what they used to have with 20XX without breaking their bank or forcing them into the cloud. I won’t get into a debate on the various cloud services but for most of our customers it either isn’t an option or they have no interest in it.

    2012 Essentials give us most of what we want for an SBS install, RWW and Remote File Access (RFA) are huge but we need to be able to add-in on premise email for a reasonable sum.

    Now I just have to learn how to install Exchange, we haven’t done a bare install of Exchange since the days of Exchange 2000.

  16. I install SBS in a lot of third world countries (PNG, Solomon, Samoa, Vanuatu and at home in Autralia). These countries have very bad Internet and it makes sense to run a local server. Hosted stuff is just not reliable enough. The use of internal email frees a lot of Internet bandwith.
    Even here in Australia where some areas still have bad internet a hosted option is NOT an option.
    I hope Microsoft will keep that in mind and keeps the SBS product going for those countries a bit longer?
    I thought it is a great product for a very specific and growing market.

  17. Robert on July 18, 2012 at 11:15 pm said:

    The sad thing is without Exchange included I can see a lot of my clients migrating to alternative solutions. It could be SBS Essentials + Zarafa. Or I could end up going Samba 4, Debian, + Zarafa or Zimbra or any other exchange alternative.

    Most instances my clients wouldn’t buy “standard” exchange with no enterprise pricing its too expensive.

    I hope MS see sense and provide licensing that lets Small Businesses do what they always have done.

  18. Darren on July 24, 2012 at 8:59 pm said:

    Microsoft is finally biting the hand that has fed it for 30 years – the resellers! They are forcing prices up and thus will be forcing people to the idea of the cloud. People cannot compete with Microsoft online pricing and thus, the SMB will begin to disappear ….. you read it here first 😉

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