Why Microsoft was Right to Kill SBS

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Microsoft’s decision to discontinue Small Business Server, a highly popular product in the channel, has rankled many solution providers who believe the replacement, Windows Server 2012, and cloud options aren’t always appropriate for small businesses. However, there’s logic behind Microsoft’s decision, and it will ultimately benefit the channel.

To say the channel isn’t happy with Microsoft’s decision to discontinue Windows Small Business Server would be an understatement. The loss of the bestselling product has rankled many solution providers who say Microsoft is turning its back on partners and customers who have come to rely on the popular product tailored for small office environments.

Instead, Microsoft believes solution providers should either support small business customers with the new Windows Server 2012 as an on-premise deployment or a cloud service.  At the Microsoft Worldwide Partner Conference in Toronto, Microsoft used one of its main stage keynote presentations to show off the new operating system as a cloud platform, revealing where Microsoft wants its small business customers to go.

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Many solution providers are upset that Microsoft is essentially compelling them to sell their customers into either more expensive server solutions or a hosted server. Already, several hosting companies, including Rackspace, have announced initiatives to expand their hosted server offerings using the new Windows Server 2012.

“I take it emotionally because I care. The vendors are starting to be as bad as the government by telling us what is right for our clients. What if everyone said that Google was the only proper cloud-based spam filter solution, would that make you smile? Of course not. The cloud has its place, it's just another way of delivery of services; I get that, but it's also not the answer for all,” wrote Don Bentz, co-founder of Preferred IT Group, in Facebook discussion.

As some solution providers have expressed, SBS may have been good for one more updated release. Another upgrade would have provided the market with a satisfying product while simultaneously providing the channel and their customers a little more time to adapt to the cloud realities of the future.

The reality is Microsoft is doing its channel partners – hosting and resellers – a favor by compelling cloud migration through the SBS discontinuation. By making the choice between on-premise and cloud easier by eliminating SBS, Microsoft is looking to accelerate cloud adoption, which will benefit end users and help stimulate cloud sales.

Beyond Rackspace and the other tier-1 hosting companies, there are scores of hosting providers struggling to engage the channel in reselling and supporting their hosted servers and services. They are often rebuffed by solution providers who still see a vibrant business in selling and supporting on-premise hardware, namely servers. In many regards, hosting providers aren’t competing against other hosters, but rather on-premise servers flowing through solution providers.

True, moving to cloud servers doesn’t always meet the customers’ current need, which is why Microsoft says Windows Server 2012 – available in September – will remain a viable offering. However, the majority of small businesses can be supported with cloud-based servers more efficiently from an administrative and cost perspective.

Solution providers will benefit from this migration as reselling space and support services in a hosting environment creates an annuity revenue stream for their business and more deeply entangles their sales and support teams with customers. Solution provider may not have that same one-time revenue from the sale of a server, but they will gain incremental revenue and profit benefits over time.

Like all things related to cloud computing in the channel, this change will require solution providers to make tough decisions about their business operations and structure. Those solution providers making the transition will find their administrative and technical support burdens decreased by the hosted model, thus lowering their cost of sales and operations. That alone is worth following Microsoft’s lead.

For customers that don’t want cloud, there’s still Windows Server 2012, a more complicated product for sure. But, as Vlad Mazek, CEO of Own Web Now, wrote on his Facebook wall, complicated means more professional services revenue for supporting solution providers.

Change is often painful. In the case of Microsoft’s Small Business Server, change is painful for the ultimate betterment of the partner and customer.

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