IBM, Microsoft Court SMBs with Cloud, Appliances

Microsoft entices SMBs with cloud offerings, while IBM serves up an appliance

By Joab Jackson
Tue, March 23, 2010

IDG News Service — In terms of running IT operations, 2010 may be a good year for small to medium-sized businesses (SMBs).

At least two major vendors, IBM (IBM) and Microsoft (MSFT), are starting to focus on the SMB market with their latest offerings. The only question for businesses is whether to run their applications in the cloud or use a prepackaged offering that can be run in-house.

Both approaches offer advantages heretofore largely unavailable to SMBs, which have traditionally been underserved by large IT vendors, analysts said.

While details of its cloud computing offering are still emerging, one area that Microsoft sees as ready for the cloud services is the SMB market, said Birger Steen, who is the Microsoft vice president for SMB.

Microsoft views SMBs as one of the largest untapped markets for the company, Steen said in an interview.

An SMB is widely defined as an organization with one to 500 employees and can include, for instance, a dentist's office or a home business hawking hand-made jewelry.

Microsoft estimates that there are over 150 million SMBs in the world, only 10 million of which use IT in any but the most rudimentary way.

"A lot of these businesses really are underserved," Steen said, noting that this segment is looking for relatively low-cost options that are easy to maintain. "We want to bring [Microsoft software] to them in an affordable way," by using cloud computing.

Cloud computing offers previously unavailable advantages to small businesses, Steen said. Typically, SMBs have had to settle for stripped-down versions of enterprise software from the large vendors, or software from lesser-known smaller providers. In either case, the software could be more troublesome to maintain, compared to the software enjoyed by companies with larger IT budgets. So, cloud computing allows smaller companies to benefit from "enterprise scale" in terms of features and reliability. It also allows organizations to cut capital expenditures for new equipment, which can prove to be a costly and unnecessary expense should business decline.

Microsoft is taking such a bullish stance on the cloud that, earlier this month, the company discontinued development of its Enterprise Business Server (EBS), a software package aimed at smaller SMBs.

EBS didn't work out for a variety of reasons, Steen said. First, small organizations tend to buy their software piecemeal. They may purchase a file server this year and an e-mail server next year. So deploying an integrated package would have meant replacing perfectly working software, something organizations were reluctant to do.

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