Bye Bye Essential Business Server, Hello CloudBye Bye Essential Business Server, Hello Cloud

Microsoft announces its betting big on cloud computing and discontinues its midmarket server offering.On Friday, Microsoft pulled the plug on Windows Essential Business Server. In an effort to "streamline" the server product portfolio, Microsoft is "discontinuing future development of Windows Essential Business Server (EBS), effective June 30th, 2010." The product dates back to 2005 when it was announced under the code name Centro. EBS was targeted to SMBs with 50-250 employees and the current release, priced at approximately $7,000, began shipping in November 2008; it combines Windows Server 2008, Exchange Server 2007, Forefront Security, and ISA Server.

Typically, companies bury announcements on Fridays and this one made nary a wave. But even if Bill Gates himself had announced this during an Oscar acceptance speech, this news shouldn't have caught anyone off-guard. In fact, more than a year ago the associate editor of this site posed the question: "Do companies need the Small or Essential Business Server?" To be clear, Microsoft has indicated that it will continue Windows Small Business Server, which combines Exchange and Windows Server for up to 75-seat licenses.

So why is EBS headed into the sunset and why shouldn't this surprise anyone? The answer lies in the cloud.

Here's Microsoft's official announcement about why EBS is going bye bye:

"Since the launch of EBS, several changes have occurred that drove our decision to streamline our server product portfolio midsize businesses are rapidly turning to technologies such as management, virtualization and cloud computing as a means to cut costs, improve efficiency, and increase competitiveness."

Though not specifically commenting on EBS, CEO Steve Ballmer made the rationale more clear in his speech last week at the University of Washington when he said of Microsoft's commitment to cloud computing, Ballmer said, "We're all in." To that end, approximately 70% of Microsoft employees are working on cloud-related projects and that's expected to climb to 90% before year end. That doesn't leave much, if any, room for traditional packaged software development and support.

information's own Bob Evans views the speech as a pivotal shift for Microsoft. He said, "After a few years of letting his company slowly but steadily morph from an indispensably strategic IT leader to a B-list supplier of dependable products, Microsoft CEO Steve Ballmer has fired a lightning bolt into the very heart of the company with a sweeping and unconditional promise to transform Microsoft into an end-to-end cloud-computing dynamo."

Turning back to what this means for SMB's using EBS, the writing is on the wall - if you haven't considered cloud options yet, it's high time to get serious. The "dependable products" from Microsoft won't vanish overnight, but more and more of the IT innovation that can lend your business competitive advantage is happening in the cloud.

And as to the smaller businesses relying on Windows Small Business Server, Microsoft may well continue with this product for years, but that doesn't mean that it's not time for you to poke your head into the cloud as well. As Tim Anderson of vnunet.com said 18 months ago in reviewing the release of the 2008 version, "Still, as online hosted services improve, it is hard to see this product having much market five years from now. This could be the last Small Business Server."

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