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Microsoft is expected/rumored to be coming out with a hardware appliance that works as a small business server.  Designed for really small shops (five users, that kind of thing), it’s Microsoft’s bid to go up against Linux.  Generously, the server will allow up to five users without CALs (Client Access Licenses).  This is currently the problem cost-wise for shops looking to get a cheap server.

“It’s very low-end and designed for incredibly small shops that are not using servers,” said another source familiar with the appliance effort, who requested anonymity. “Microsoft realizes small shops will move to servers, and they’re going to make sure they’re not going to Linux appliances with Google applications on it.”

Link here.

Microsoft’s move here (which looks like putting Small Business Server in a box) is sensible in one regard:  Keeping the small business customer from moving to Linux.  However, it does does not appear to address the major problem — people using Linux servers for all kinds of uses, such as firewalls and antispam gateways. 

The problem with Microsoft server software has always been the cost.  For example, while ISA is arguably a very robust firewall, it’s hard to compare it to the free solutions (IpTables, Smoothwall, IPCop, etc.) that have been out in the Linux space for years and have a tremendous following in the open source community.  Lack of developer support becomes a problem, because companies like Sunbelt can’t easily ask a customer to buy a dedicated server and install a Windows server license on it — and then pay for our software.  Battling Linux on the server side is going to take much more than this attempt on Microsoft’s part — Linux may not get the desktop, but it is firmly entrenched as a robust, solid and highly reliable server solution, and the cost is only one part of that equation. 

Alex Eckelberry
(Thanks Greg)

UPDATE:  Bad rumor. More here.