After a month-long delay, Microsoft on Tuesday released an update to a version of Windows for small businesses that includes new features for patching PCs and a $200 price cut.

Microsoft's "release 2" update to Windows Small Business Server 2003 comes in two editions. A premium edition bundles Windows Server, Exchange Server 2003, and SQL Server 2005 Workgroup Edition for a list price of $1,299, a $200 reduction compared to Small Business Server 2003, released three years ago. A standard edition bundles Windows Server and Exchange for $599. Customers will also pay a $99 client access license fee for each PC or user that connects to the server, up to a limit of 75.

The update to Microsoft's version of Windows Server is an intermediate release before a small-business version of Longhorn Server, Microsoft's next server-side operating system. Longhorn is due in the second half of next year, and the small-business variant, code-named "Cougar," will likely arrive after the general release of Longhorn, says Steven VanRoekel, a director for Windows Server at Microsoft. The product had originally been scheduled for delivery in June. Microsoft is also developing a future product code-named "Centro" for the midmarket that will include Longhorn Server, Exchange 2007, and the next version of Microsoft's firewall software.

The update to Windows Small Business Server includes a new feature called "green check," which can automatically distribute software patches to PCs connected to the server and alert systems administrators if PCs are out of compliance with the latest security updates from Microsoft. The company also added to the product the ability for PCs connected to Small Business Server R2 to access additional servers running Exchange or SQL Server without paying additional client access license fees, according to VanRoekel.

Microsoft CEO Steve Ballmer was scheduled to unveil the new product in a keynote speech at the company's Worldwide Partner Conference in Boston Tuesday. Microsoft competes in the small-business market with several products based on the open-source Linux operating system. VanRoekel says many companies that buy Windows SBS haven't previously run server software and are replacing rudimentary computer networks.