Microsoft raising prices for beefed-up Windows Server

But Microsoft says most customers will save money

Microsoft this week announced the immediate availability of pre-release versions of its upcoming Windows Essential Server Solutions for small to midsize companies, as well as pricing for the software bundles.

Slated to be generally available in the second half of this year, the bundles are based around the recently released Windows Server 2008 and Exchange Server 2007, while also including -- depending on the version -- security software such as Forefront Security for Exchange, integration with the Office Live Small Business Web-hosted service, or SQL Server 2008.

The integrated software stacks are intended to be easy-to-deploy, less-expensive options aimed at smaller firms. They can be downloaded and tested at

Faced with increasing threats from software-as-a-service offerings and Linux/open-source-based versions, Microsoft promised in February to offer pricing that would be "attractive to customers in this new world."

The standard edition of Windows Small Business Server (SBS) 2008, including five client access licenses (CAL) for employees that access the software, will cost US$1,089.

Paul DeGroot, an analyst at the independent firm, Directions on Microsoft, said that price is "significantly" higher than Windows Small Business Server 2003 R2. Taking into account the 20 percent discount Microsoft offers for smaller firms that buy using its Open License program, DeGroot said that customers will pay US$871 for the standard edition of SBS 2008, or 68% more than the approximately US$521 they would pay for the standard version of SBS 2003 today.

DeGroot said that the price for the premium edition of SBS has a "similar uplift." He said that the apparent across-the-board price increases are partly because SBS 2003 "was a great deal" and partly because the 2008 versions include more software licenses -- possibly more than the companies need.

For instance, with the Essential Business Bundle aimed at midsize firms with up to 300 employees, customers get three Windows Server 2008 licenses and two Exchange 2007 ones. There are also management capabilities derived from a cut-down version of Microsoft's System Center management software.

"That seems like a lot of Exchange for 300 people, and a lot of management tooling for a small network," DeGroot said.

A Microsoft spokesman, however, said that with the new prices and changes to the CAL terms, most customers will save money. For instance, customers will be able to buy CALs one at a time, rather than in five-packs, as they had to with SBS 2003. Customers can also apply their CALs to other copies of Windows Server, SQL Server or Exchange Server on their networks.

Although the latter sounds good in principle, DeGroot said that for the many SBS customers who were looking for a one-server solution in the first place, "it's not clear to me what this benefit delivers, especially since these CALs aren't cheap."

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