Despite the rapid growth of networking in the home, recent studies have informed Microsoft that a vast multitude of single-office businesses -- on the "far left" side of the SMB scale -- still work with either single PCs for their principal applications, or peer-to-peer networked clients. The company's research has drawn the conclusion that this market may be best served by an "all-in-one solution" -- one where business users simply buy the server and have it plugged in for them, and they don't even install the operating system.

For this reason, there's no fancy plastic box for the newest SKU for Microsoft's server OS announced this morning, called Windows Server 2008 Foundation. Instead, this very-basic rendition will come pre-installed on OEM and partner systems, the first of which are likely to premiere this month. Look for likely brand names such as HP, Dell, IBM, and Acer to top the list of manufacturers offering new, simple half-tower units at lower prices.

"If you look at the small business space worldwide, there's approximately 33 million entities with 1 - 25 PCs, and less than 50 employees. And if you dig into that space, you'll find that about 70% of those small businesses do not have a server," stated Microsoft Windows Server general manager Chris Phillips, in an interview with Betanews. "Small businesses have all the problems that larger businesses have, especially around improving productivity, driving down costs, and increasing revenue."

For years, Microsoft has been producing a Small Business Server suite that had been marketed to the SMB space. Then last year, the company divided that market space into two segments, with SBS 2008 targeting smaller companies and Essential Business Server 2008 the companies that can at least afford multiple floors. The theory behind SBS and EBS is that certain classes of SMBs need guidance not only in setting up systems, but developing best practices and in actually growing the business around information services.

That's not the segment that Windows Server 2008 Foundation (WSF) is aiming at. "When you start a small business, you hire a couple of employees, and you're all working on PCs and doing a peer-to-peer type of network. Then you start getting complexity around your files and how to put them all together. So the first thing you probably go out and do is acquire a foundation server to do file and print," remarked Phillips. "Maybe you have a line-of-business application that really is your business -- maybe literally in Excel, or maybe it's Intuit's product or a dental or law app. You build your company around that application's productivity.

"SBS is a suite of workloads, and that's where you're getting a little more sophisticated," he continued, "where you want to have things like SharePoint, Exchange, SQL Server for your line-of-business application, mobile computing capability, more advanced security functionality. And you're going to get to multiple servers. That's a bigger step up in functionality and productivity than what we offer with...Foundation Server."

With Windows Server 2008, the company placed more emphasis on the creation of multiple roles, letting admins designate the tasks and purposes of individual units and then enabling automated setup where those tasks may co-exist. For WSF, roles won't be as vital. Servers shipped with WSF pre-installed will support up to 15 users (Windows Server 2008 Standard edition supports unlimited users, while SBS 2008 supports up to 75 and EBS 2008 supports up to 300), and will be limited to 8 GB of memory address space (Standard supports 32 GB). There will be no hardware virtualization support, and Phillips told Betanews that there will not be a separate Hyper-V extension available as there was for early versions of WS2K8 Standard -- this particular class of user doesn't require virtualization yet, he said. And since this SKU will only be available through partners and OEMs, WSF will not be offered through Client Access Licenses.

"Small businesses are the most diverse businesses in the world," said Phillips. "It's not like when you move up to the enterprise where things are more segregated. In this economy, companies are created, and destroyed at a very rapid rate. Businesses want to consume services at a price/performance that's comfortable for them. [For this reason], Foundation Server is really a 'roll-your-own' system."

While SBS and EBS are suites that are both geared specifically for running Microsoft's other server products, especially Exchange Server 2007, the WSF customer will probably have his e-mail hosted elsewhere. That's not to say there isn't a Microsoft option for that customer, though. "There are many places in the world where small businesses get their e-mail from cloud services, and we plan on addressing that through our Live offerings as through our third parties."

It will be up to OEMs and resellers -- the only sources for this SKU of Windows Server -- to determine bundled prices and availability, though Phillips told us to expect lower software prices once these systems do become available in the coming days.