I can't believe I'm writing these words, but here goes. Microsoft just released Windows Small Business Server 2008 (see my preview), the best version yet of its highly regarded small business server solution. For most potential small business customers of this product, however, it's time to move on. The future is in the clouds, and from what I can see, SBS is still largely stuck in the traditional software models of the past.

Fortunately, embracing a less complex and potentially less costly future doesn't require you to abandon Microsoft or its excellent server solutions. Just yesterday, less than one week after the software giant announced the general availability of its SBS 2008 product line, Microsoft also announced the general availability of its hosted Exchange and Share Points solutions via Microsoft Online Services (MOS, see my preview). My advice to small businesses looking to adopt Microsoft's communication and collaboration solutions is this: Skip on-premise installs like SBS wherever possible and look instead to the cloud.

MOS is available in a number of offering types, so your costs will vary according to need. You can purchase individual services on a per user basis--including Exchange ($10 per month per user), SharePoint ($7.25), Office Communications ($2.50), and Office Live Meeting ($4.50)--or you can get the Business Productivity Online Standard Suite, which includes all of the aforementioned products, for $15 per user per month. You can save money further by opting for Deskless versions of some products. Exchange Online Deskless Worker, for example, which provides only OWA-based Exchange access, costs just $2.00 per month per user. A Deskless version of SharePoint is also $2 and a Deskless Worker Online package, which combines both, is $3 per user per month.


The MOS service administration site.

I think there's an interesting discussion to be had around this pricing, and how it compares to SBS 2008. Microsoft's decision to raise the price of SBS 2008 when compared with its predecessors was met with some derision, though the software giant would argue that the pricing actually gets cheaper once you cross the 18-20 user line. Fair enough. But comparing the pricing of SBS 2008 Standard Edition vs. MOS for a small business that needs both Exchange and SharePoint access, something interesting emerges.

At 20 users, SBS 2008 with 20 CALs costs $2244, not counting the hardware, which I'll value at about $1000. Meanwhile, a 20-user Business Productivity Online Standard Suite subscription would cost $300 per month, though it's likely that most businesses would save money by choosing some of the Web-only Deskless Worker options. But at the most expensive possible rate, you could get about 11 months of MOS for the cost of SBS 2008. But that's true only if you don't include the ongoing cost of a Microsoft partner maintaining the server for you. Ultimately, MOS could actually cost about the same or perhaps a bit more as SBS over time, especially if you pick and chose MOS services wisely.

Costs aside, Exchange especially, and SharePoint to a lesser degree, are exactly the types of services that many small and medium-sized businesses should consider moving out from on-premise servers to hosted solutions. They're complex and expensive, management-heavy, and mission critical. And Microsoft offers a migration toolkit for moving those who currently host Exchange on-site that wish to move to MOS.


The MOS Sign In Application configuring Microsoft Outlook.

As far as SBS 2008 is concerned, I don't want to be misunderstood: It is absolutely the best version of SBS yet created, and Microsoft should be saluted for its work over the past decade at moving its full-featured server products downmarket in a way that has made them really approachable by its smaller customers. But the only online services tie in SBS 2008 is an admittedly nicely-done integration piece with Office Live Small Business. SBS customers should be able to do more than host just their Web sites offsite: Their email and collaboration environments should be optionally available as offsite hosted offerings as well. My guess is that Microsoft is heading in that very direction, but it needs to happen now, not in a few years.

For those small businesses that do opt for the hosted route, either via Microsoft's MOS or a partner-hosted variant, there are still some needs for local storage and, potentially, third-party server applications. In the latter case, SBS 2008 might still be a viable option for many businesses. But the smallest of small businesses might want to look at something even simpler and less expensive: Simply host what you can externally and utilize a Windows Home Server-based server or even a Vista-based PC for local storage. It sounds odd, but this type of ad hoc solution will most likely save you time, money, and effort. And my guess is that Microsoft will offer something very much like this--a largely hosted version of SBS with some local components and a monthly subscription fee--in a future version of that software as well.

An edited version of this article appeared in the November 18, 2008 issue of Windows IT Pro UPDATE. --Paul