Microsoft Outlines New Mid-Market Strategy

Microsoft is tweaking its infrastructure plans for mid-market businesses.

Announced as part of its business summit Wednesday, the new infrastructure initiative will go by the code name of Centro and integrate its next-generation servers and Microsoft Exchange, bundled with security and management improvements.

This combined product is supposed to make it easier for small IT shops in charge of 25 to 500 PCs to install and maintain. Centro is expected to after the next Windows Server release, slated for sometime after Windows Vista in late 2006.

Bill Gates, Microsoft chairman and chief software architect, said the server prototype will fit in with its overall Longhorn server line. In many ways, the infrastructure initiative is similar to the move it made in 2000 with its Small Business Server (SBS), which he said was a runaway success for the company.

But it’s not a straightforward matter of adapting the SBS to meet the needs of the mid-market community, he said.

“We can’t have the restriction that things run against a single server, we can’t have much in the way of restrictions in terms of the limits or richness of the software that gets defined,” he said in a Web cast keynote speech to summit attendees. “But we can simplify things quite a bit.”

The Centro news is one of two major announcements presented by Microsoft executives Wednesday. Microsoft’s plans for its Microsoft Business Solutions (MBS) line of business applications under the Dynamics line, was also outlined Wednesday at the business summit.

Michael Dortch, an analyst at research and consulting firm the Robert Frances Group, said the technological integration provided by Centro and Dynamics is good news for small- to midsize businesses (SMB), though it will have to strike a balance between integration and vendor lock-in. It also provides benefits for large enterprises, which often conduct business with these smaller organizations.

“So if Microsoft can combine a smooth path for growth and integration from Centro and Dynamics to its offerings aimed at larger enterprises, the company could be creating both long-term IT architectures and long-term loyalty for many SMBs,” he said in an e-mail interview. “This could present some additional significant challenges to other software vendors pursuing SMBs, and could escalate competition in the SMB market between Microsoft and providers of open source alternatives to Microsoft’s solutions.”