Computerworld — Microsoft Corp. Wednesday announced the 10th member of its Windows Server 2008 family with a new version of the server operating system aimed at companies with fewer than 15 employees.

Windows Server 2008 Foundation is intended for small firms without dedicated IT staff but that want to store files, share printers, host software and serve as Internet gateways.

It will come pre-installed on low-end servers, which have fallen drastically in price in recent years along with other PC hardware.

Dell Inc. will offer a PowerEdge T300 server running Foundation for $1,341 after a promotional discount, while Hewlett-Packard Co. plans to release one for under $1,000, according to Julius Sinkevicius, director of product management for Windows Server at Microsoft.

Microsoft has sold a Small Business Server product for almost a decade. The latest Windows Server 2008 version supports up to 75 users.

But Microsoft CEO Steve Ballmer argued that there was a need for an even lower-end offering from the software maker.

"If somebody can buy a $500 [hardware] server, they're a little loath to spend $500 for the server operating system that goes with it," Ballmer told analysts in February.

Foundation servers will compete with servers running the free Linux operating system, such as IBM's similarly named Lotus Foundations server appliance.

IBM first announced the for-fee Lotus Foundations product in January 2008. It is also aimed at small businesses. Like Foundation Server, it is being sold primarily through resellers and system integrators.

The difference is that Lotus Foundations comes as an all-in-one appliance, with a number of features and applications pre-installed in addition to Linux. They include Lotus Notes e-mail and collaboration and Symphony productivity software.

Foundation comes alone without any bundled apps.

In a blog, Bilal Jaffery, a marketing manager for IBM Lotus Foundations, called the new rival product from Microsoft "a strategy to improve the [Microsoft] short term bottom line as it provides nothing new to the market ... That only results in my business partners being able to close more deals by providing more credibility to the Linux revolution."

Sinkevicius said Microsoft will leverage its partner ecosystem to push Windows Server Foundation to more than 40 countries at launch. He also said small businesses don't buy on price or features, but on the line-of-business applications they need to run, of which many more are available on Windows than Linux.

Foundation will also de facto compete for buyers with Microsoft's Small Business Server (SBS).

There are two primary differences between SBS and the new Foundation product. Like Lotus Foundations, SBS ships with an integrated stack of Microsoft software on top, including Exchange Server for e-mail, SharePoint for collaboration and Forefront for security.

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