In-Depth

On the Death of SBS: Microsoft Partners Rally from Anger to Acceptance

Rage was the first reaction to the death of the Microsoft Windows Small Business Server brand. Now resellers are making plans for what comes next.

• By Rich Freeman
• December 10, 2012

It would be a mistake to call the announcement Microsoft made last summer about its Windows Small Business Server (SBS) suite a complete surprise. Rumors had been circulating within the company's small to midsize business (SMB) channel for months that the next SBS release, expected later in the year, might be the last.

Even so, the blog entry that the Microsoft Windows Server marketing team quietly posted on the morning of July 5, 2012, landed among SBS resellers like a bombshell. The new version of Windows Small Business Server Essentials -- an SBS edition that combines on-premises networking components with connections to cloud-based e-mail and collaboration tools -- would be named Windows Server 2012 Essentials, wrote senior product manager David Fabritius, making it "a full-fledged member of the Windows Server family." Three paragraphs later and almost as an afterthought, Fabritius added this: "Windows SBS 2011 Standard, which includes Exchange Server and SharePoint Foundation, will be the final such Windows SBS offering."

It was the end of an era. Over the years, thousands of Microsoft partners had built their businesses around SBS. Together, they'd created a vibrant community of like-minded local SBS resellers who shared technical knowledge and business advice. Fabritius' announcement signaled that, though SBS Essentials would live on under a new name, the 15-year-old SBS brand was dead. Worse yet, the only edition of SBS that didn't rely on cloud services was also dead. That posed major problems for partners who said their clients either didn't trust cloud-based solutions or lacked access to fast, dependable broadband.

Not surprisingly, then, reaction to the SBS news among Microsoft partners was swift and overwhelmingly negative. "This is by far the biggest bonehead decision Microsoft has made!" raged one commenter on the Windows Server blog. Other SBS resellers were less furious than stunned. "It was pretty shocking," says Philip Elder, owner of MPECS Inc., a small business solution provider in Alberta, Canada. "SBS has been a very big part of who we are."

Fast-forward three months, however, and a new mood was evident among attendees at SMB Nation 2012 Fall, a partner event held Oct. 12-14 in Las Vegas. "In early July you saw a great deal of hostility," notes Harry Brelsford, founder of SMB Nation Inc., the Bainbridge Island, Wash.-based company that hosted the conference. At the conference, partners were grimly making plans for their post-SBS future. "They have an understanding of what the announcement means, and they're now considering what their next steps are," Brelsford says.

Indeed, judging by the atmosphere at SMB Nation, the grieving period for SBS has all but ended. Within the span of a relatively brief period, SBS integrators have progressed beyond anger and denial to a grudging, unhappy acceptance of a landmark product's fate.

No Cause for Panic
One reason for the calmer mood among SBS partners is their dawning realization that SBS 2011 Standard isn't actually going away anytime soon. The product will remain available through most channels until June 30 of next year and through the OEM channel for another six months beyond that. Moreover, Microsoft will continue providing product support for several additional years. "We're talking about something that will be alive and kicking and available for sale until December of next year, so [partners] have plenty of time to figure out what the next big thing is," observes Karl Palachuk, a blogger, trainer and SBS expert who spoke at SMB Nation.

Brelsford, too, sees little cause for panic. "My oldest son will be out of college when this really hits, and he's a junior in high school now," he says. "It's a long time away."

Some partners say Microsoft's failure to clarify that point earlier is symptomatic of its larger failure to prepare the channel for what was coming and guide them toward what comes next. "I don't think they communicated it well," complains Jeff Middleton, an SBS-focused Microsoft Most Valuable Professional (MVP) who runs IT Pro Experts, a New Orleans-based provider of training, events and services for SMB partners. Nor has Microsoft been especially forthcoming more recently, he adds. Even MVPs like himself with formerly close ties to the SBS product group have had little interaction with Redmond in recent months. "They're not listening to us," Middleton says. "We're more outside the fence at this time than we've ever been."

As a result, partners have been left to forge a path forward on their own. Elder was one of many at SMB Nation who plans to assemble SBS surrogates by hand using products such as Windows Server and the on-site editions of Microsoft Exchange and SQL Server. The trick, however, is that SMBs are notoriously tight-fisted when it comes to IT, and buying all of those products separately -- plus the servers to run them on -- can quickly add up.

That has some solution providers exploring creative implementation schemes that exploit the licensing downgrade and VM rights included with the new Windows Server 2012 Standard edition. In theory, there's nothing to stop a partner from installing that OS on a single server, creating two virtual instances, downgrading one to Windows Server 2012 Essentials for the integrated data protection and remote access functionality, and installing Microsoft Exchange Server on the other.

Still, such a solution would not only cost more than SBS -- it would take longer to deploy, as well. SBS comes with wizards that automate and structure the installation process, Elder notes. "Now it's up to us to develop a wizard-like experience for us and our technicians, so in the end we end up with a server that's set up in the same way consistently," he says.

For that reason and others, some one-time cloud skeptics have begun taking a closer look at hosted solutions such as Microsoft Office 365. Palachuk finds that trend encouraging. Like it or not, he argues, most SMB networks are going to include at least some cloud-based solutions eventually. The sooner SMB partners accept that fact, the better for them and their customers. "The people who believe that any cloud components won't work in their client's business don't understand the cloud components that are for sale," Palachuk says. "The solutions that are out there are very good."

Brelsford, who agrees, has been encouraging SBS partners to consider hosting virtual desktops in the cloud and essentially renting them to clients for a flat monthly fee. "There are small business owners that have been burned with buying a lot of IT and a lot of expensive labor to run it," he notes. Converting end points from a capital outlay to an operating expense might be attractive enough to overcome any doubts those companies have about the cloud's security and reliability.

Unconvinced by any of those options, some partners are simply playing for time. At least one SMB Nation attendee, in fact, is thinking seriously about stockpiling as many SBS 2011 Standard licenses as he can get his hands on and doling them out gradually for a few years until he finds a small business solution that makes sense for his clients.

Looking for Whatever Makes Money
For his part, Middleton fears that partners thinking solely about how to replace SBS may not be looking far enough down the road. As cloud computing gradually becomes the reigning IT paradigm, providers of traditional installation and maintenance services will find themselves fighting over a shrinking market, he observes. To survive the shakeout that follows (which could ultimately eliminate or marginalize 60 percent of today's SMB channel, according to Port Washington, N.Y.-based advisory firm The 2112 Group), Middleton believes partners must convert themselves from "mechanics" into strategic consultants. "People have got to think not just in terms of what products they're going to sell but what their business model is going to be," he says.

Palachuk, meanwhile, sees challenges ahead for Microsoft, too, as resellers seeking to replace SBS Standard parts begin investigating products from other vendors. "Microsoft may not necessarily win each of the battles for each of the [SBS] components," he notes. Indeed, SMB Nation attendees were actively evaluating everything from Linux-based products to communication and collaboration suites from companies such as Google Inc. and Kerio Technologies Inc., of San Jose, Calif. "They're looking for whatever is going to make them money," Palachuk observes.

Whatever the future holds, most SMB partners expect the reseller community that SBS first brought into being to survive that product's demise. "The community is going strong and will continue to go strong," Palachuk insists, largely because SBS ceased to be the only thing its members had in common years ago. "It's grown beyond that," he says.

Elder is even more optimistic. Adversity can destroy a community, he acknowledges, but the death of SBS will ultimately bring the SMB partner community even closer together. "In the long run, I do believe we'll be stronger," Elder predicts, adding that the time to mourn SBS has passed. "Let's move forward," he says.