For those tiny companies with a few computers, spending money on a big, honking server to do something like centralizing files or running simple line-of-business applications can be an expensive proposition, as server costs skyrocket into the thousands of dollars and there's little on-site IT brainpower to set a server up.

Microsoft has long offered versions of Windows Server aimed specifically at small businesses, but never really at businesses this small. However, the company announced Wednesday a product named Windows Server 2008 Foundation -- aimed at organizations with 15 or fewer computer users -- that will be available on systems costing less than $1,000 including software and hardware.

According to IDC, the market for this type of server is significant -- only 30% of the tens of millions of small businesses that could use a server actually have one. "There's a value prop for this type of system," IDC research VP Al Gillen said in an interview.

Small companies often would be well served by centralized backup, domain control, file sharing, or printer sharing. They may also want to use a server to run a line-of-business application. Some smaller branch offices might also be well served by a local file share instead of always having to share and store files on a central file share accessed through a VPN.

Along with its limited number of users, Windows Server 2008 Foundation also has some hardware and software constraints not found in other versions of Windows Server. Namely, Windows Server 2008 Foundation is designed for a one-processor architecture with a limit of 8 GB of RAM. It also lacks virtualization capabilities, though it does include the rest of the standard set of Windows Server features.

Windows Server 2008 Foundation will only be sold prepackaged through computer manufacturers like Acer, Dell, Hewlett-Packard, and IBM, rather than as standalone, boxed software. The prepackaging of Windows Server 2008 Foundation will allow OEMs and channel partners to do some customization as needed.

One striking omission in Windows Server 2008 Foundation is the existence of any features specialized to meet the needs of small businesses. "If you look at what Microsoft did with Small Business Server and Essential Business Server, they brought a lot of really good wizards and configuration tools to not only help customers set things up, but make sure they didn't set things up wrong," Gillen said. "Microsoft could take this a level deeper and automate some of the configuration options with the product."

Instead, Microsoft says small businesses should rely on their computer manufacturers and both paid and unpaid IT help, as well as their OEM partners, to help with advanced setup. "This seems to be targeted not just at small businesses but also at the channel partner, which plays a critical role in this space as far as choosing the applications, installing, and then configuring them," Charles King, principal analyst with Pund-IT, said in an interview.

Microsoft anticipates availability of systems running Windows Server 2008 Foundation within "the next month or two," said Russ Madlener, Microsoft's director of Windows Server Solutions.

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