www.idc.com

Paths to Opportunities with Windows Small Business Server 2003: Enabling Mobility, Featuring Windows Mobile

Paths to Opportunities with Windows Small Business Server 2003: Enabling Mobility, Featuring Windows Mobile

Business practices, based on the real-world experience of successful Microsoft partners, that help you enhance your opportunities in the small and medium-sized business segment with solutions based on Microsoft® Windows® Small Business Server (SBS) 2003.

February 2006

2

AgendaAgenda

Market Opportunity for Mobility and Remote Access in Small Businesses

Opportunity Drivers for Mobility and Remote Access SBS 2003 Windows Mobile powered device support and Remote

Windows Workplace Revenue Models

– Increasing Core SBS 2003 Revenue– Incremental Device Sales and Activation Fees

Case Studies: Fees, Effort and Profit for Sample SBS 2003 Deployments with Windows Mobile

Partner Ecosystem Recommended Training and Certification Business Practices and Recommendations Situation Analysis and Conclusions

3

Market Opportunity for MobilityMarket Opportunity for Mobility

Worldwide Converged Mobile Device Forecast by Unit Shipments, 2004-2007 (M)

IDC forecasts significant demand in the small business market for mobile devices.

The worldwide market will grow to over 107 million shipments by 2007.

Source: IDC, 2006

0

20

40

60

80

100

120

Devices Shipped

2004 2005 2006 2007

4

Market Opportunity for Remote AccessMarket Opportunity for Remote Access

Remote Access Support Among U.S. Small Businesses (% of Total)

2914

Remote network access for telecommuters and remote workers

1811

Remote sales order entry and inquiry support

Plan to Add in Next 12 Months

Currently Support

Source: IDC, 2006

Small businesses are planning to increase the amount of remote access they provide for employees.

5

Drivers for Market GrowthDrivers for Market Growth

Productivity

CustomerRelationshipManagement

Device Availability

Few Legacy Hurdles

Today’s business climate requires staying connected.

Small businesses are looking for cost-effective ways to implement mobility.

Market drivers include:

– Customer relationship management

– Productivity– Greater device

availability– Few legacy

technology hurdles

6

Opportunity Drivers for Mobility: Customer Relationship ManagementOpportunity Drivers for Mobility: Customer Relationship Management

Businesses need to stay in constant touch with customers to serve them better.

Small businesses may have an even greater need than larger businesses:

–One or two key employees may need to stay in constant touch, even when on the road.

CustomerRelationshipManagement

7

Opportunity Drivers for Mobility: ProductivityOpportunity Drivers for Mobility: Productivity

Productivity

With limited staff, small businesses require key staff to perform multiple functions.

These employees must be productive at all times, even when on the road.

8

Opportunity Drivers for Mobility: Device and Infrastructure AvailabilityOpportunity Drivers for Mobility: Device and Infrastructure Availability

Device Availability

Technology infrastructures have emerged to support remote access and employee mobility.

These technologies include both data-capable devices, such as Windows Mobile powered devices, and infrastructure products like SBS 2003.

9

Opportunity Drivers for Mobility: Few Legacy Technology HurdlesOpportunity Drivers for Mobility: Few Legacy Technology Hurdles

Few Legacy Hurdles

With fewer large-scale legacy systems, small businesses are in a good position to adopt new technologies.

IDC has observed this in many IT areas, including mobility and remote access.

10

SBS 2003 and Windows Mobile Integration: Key AdvantagesSBS 2003 and Windows Mobile Integration: Key Advantages

SBS 2003 Support of Windows Mobile-Based Devices Partners can configure Windows Mobile-based devices to access e-mail,

schedules, contacts, and task information from SBS 2003. Connected Windows Mobile-based devices can also support applications

such as Mobile Internet Explorer, Microsoft® Office Excel®, Microsoft® Office Word, and PowerPoint® Mobile.

Remote Windows Workplace (RWW) in SBS 2003 Dynamically created Web site that provides a single, consolidated entry

point for remote users anywhere via Internet-enabled PC. Provides access to e-mail, internal company Web sites, users’ desktops,

network files, and business applications.

Windows Mobile-Based Device Support and RWW Improve Partners’ Competitive Standing: Differentiate from other partners in their geographies. Increase value added to their customers. Improve reputation and profile.

11

Types of Opportunity forSBS 2003 Server SolutionsTypes of Opportunity forSBS 2003 Server Solutions

There are two primary categories of revenue opportunity for Windows Mobile-based deployments:

Core SBS 2003 Revenue

Device Sales and Activation

Expanding core SBS 2003 revenue streams:

– For many partners this represents the majority of the revenue opportunity.

Device sales and activation fees.

12

Expanding Core SBS 2003 RevenueExpanding Core SBS 2003 Revenue

Partner Quote: “We’re pitching mobile deployments to three different small businesses, all on outdated infrastructure. When

we start, we will have to upgrade them all to SBS 2003."

Opportunity: supporting Windows Mobile and RWW, increasing revenue in SBS 2003 deployments, service, training and applications.

Partners reported the primary value to offering mobility and remote access came from the ability to differentiate their core SBS 2003 offerings.

Revenue streams include: Increased services revenue during SBS 2003

installations.

Upgrades to infrastructure, resulting in pull-through of infrastructure software and hardware; this may be the most significant single revenue opportunity.

Windows Mobile-based devices as a platform for building and deploying custom applications.

Additional seats for service contracts.

Training and customization on mobility and RWW.

Core SBS 2003 Revenue

Device Sales and Activation

13

Device Sales and ActivationDevice Sales and Activation

Opportunity: realising revenue by reselling mobile devices and collecting service activation fees.

Core SBS 2003 Revenue

Device Sales and Activation

While partners said these revenues are relatively low, they represent pure margin and are very profitable to partners.

Revenue streams include: One-off service commission from the wireless

carrier:– Partners reported this ranges from

$10 to $250 per activation.

Markup or margin on device sales.

Core SBS 2003 Revenue

Device Sales and Activation

14

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

10-12 DeviceImplementation

Activation fees

Service

Hardware

Software

Source: Microsoft SBS partners interviewed by IDC, 2005

Revenue Breakdown for Windows Mobile Based-Device DeploymentsRevenue Breakdown for Windows Mobile Based-Device Deployments

For Windows Mobile-based device deployments, services is the largest % of revenue, then hardware and activation fees.

Although revenue from activation fees is sometimes small, it is highly profitable.

5 Devices:Implementation PlusManaged Services

SBS 2003Installation + Device

Set-Up

15 DeviceImplementation +

Managed Services

15

Fees, Effort and Profit Case Study #1 – DeviceImplementation Plus Ongoing Managed ServicesFees, Effort and Profit Case Study #1 – DeviceImplementation Plus Ongoing Managed Services

Deployment characteristics Deployment of 5 Windows Mobile-based

devices to work with an existing SBS 2003 infrastructure, plus third-party software and a managed service contract for the devices.

Partner observations The partner realizes several paths to revenue,

including SBS 2003 installations, device setup services, device activation fees, and third-party software revenue.

For each installation, partner works to get mobile devices on managed services contract.

Total one off-fee: $4,400Level of effort: 16 hoursGross profit: 82%Ongoing fees: $225/month

One-off revenue breakdown:

Partner staff of fewer than 5, revenues of under $1 million

Partner Quote: “Some partners wonder how to make money in mobile, and we do it through managed services

and other revenue streams."

Software25%

Services55%

ActivationFees20%

16

Fees, Effort and Profit Case Study #2 – Implementation of 10-12 Mobile DevicesFees, Effort and Profit Case Study #2 – Implementation of 10-12 Mobile Devices

Deployment characteristics

Implementation of 10-12 mobile devices on an SBS 2003 infrastructure, no maintenance or managed services on the devices.

Partner observations

Of the $4,380 for this engagement, about 75% comes from device activation fees.

Going forward, the partner sees the most opportunity in customised applications to be deployed on its mobile device installed base.

Total one-off fee: $4,380Level of effort: 8 hoursGross profit: 82%Ongoing fees: N/A

One-off revenue breakdown:

Partner staff of 150-300, revenues of $10-50 million

Partner Quote: “Once we have an installed base of mobile

devices to develop for, we plan to sell customised solutions. For us, that’s where the real money is.”

Software0%

Services27%

ActivationFees73%

Hardware0%

17

Fees, Profit and Effort Case Study #3 – SBS 2003 Installation + Mobile Device Setup Fees, Profit and Effort Case Study #3 – SBS 2003 Installation + Mobile Device Setup

Total one-off fee: $9,300Level of effort: 40 hoursGross profit: 38%Ongoing fees: $2,575/month

One-off revenue breakdown:Deployment characteristics 40-seat SBS 2003 deployment and installation

of 10 mobile devices, plus ongoing maintenance and support for the SBS 2003 installation and mobile devices.

Partner observations Device activation fees are a small percentage

of one-off revenues. The real benefit for this partner is the mobile

devices’ impact on managed service revenue. The partner charges for support by seat, so

implementing these 10 devices adds 7% to its monthly support fees.

Partner staff of 5-24, revenues of $5-10 million

Partner Quote: “What we want is the services revenue for the

mobile devices we install. That’s where we make most of our money."

Hardware28%

Services62%Activation

Fees1%

Software9%

18

Fees, Profit and Effort Case Study #4 – Device Implementation + Ongoing Managed ServicesFees, Profit and Effort Case Study #4 – Device Implementation + Ongoing Managed Services

Total one-off fee: $12,475Level of effort: 16 hoursGross profit: 23%Ongoing fees: $180/month

One-off revenue breakdown:Deployment characteristics Partner is a master aggregator,

performing implementation and ongoing support for 15 mobile devices on an existing SBS 2003 installation.

Partner observations While carrier activation fees were only

14% of the one-time fees, they represented 59% of the one-off gross profit.

The partner’s primary goal is to get a maintenance contract for the devices.

Partner staff of over 300 and revenue over $150 million

Partner Quote: “Our approach is to manage the entire activity, from activating the account with the carrier to

providing managed services and help desk activities."

Services55%

Software0%

Services32%

ActivationFees14%

Hardware54%

19

Increase Entry Points into SBS 2003 Opportunity through AlliancesIncrease Entry Points into SBS 2003 Opportunity through Alliances

InfrastructureInstallation and

Maintenance

CustomisedClient and Server

Software

Installation of LOB

Software

Configurationof LOB

Software

RequirementsAnalysis

Business ProcessAnalysis

Business ServicesTechnology Services

Entry Points

SBS 2003 opportunities offer multiple entry points for partners across a merged technology and business spectrum.

Partners are advised to match their entry point with core business capabilities.

Engage in alliances with other partners to gain entry through other points in the spectrum.

20

The Mobile Device Partner EcosystemThe Mobile Device Partner Ecosystem

Mobile devices introduce new partner types to SBS partners Carriers (e.g. Vodafone): Mobile telecommunications companies that

operate voice and data networks. Master agents: (e.g. Ingram Micro): Companies that have direct carrier

relationships and manage resale on behalf of partners without carrier relationships.

Master aggregators: Companies that provide outsourced resale, application provisioning and support for mobile devices on behalf of other partners.

Application developers: Software vendors that develop and sell applications targeted towards mobile devices.

SBS partners can take two basic paths to supporting Windows Mobile powered devices: Become a subagent of a carrier or a master agent, selling, activating,

deploying and perhaps implementing mobile devices directly. Point customers to other channels to purchase devices and focus on

setup and implementation.

20

21

Recommended Training and CertificationRecommended Training and Certification

Microsoft Small Business Specialist Community Designed to help partners recognise and address opportunities in

the small business market. Provides specialised training and marketing resources. Small Business Specialists gain access to unique content, are

listed as small business resource experts to the Microsoft customer community.

More information can be found on the Microsoft partner Web site.

Microsoft Partner Program Designed for Certified and Gold Certified partners. For SBS 2003 and Windows Mobile-based devices, three

competencies are important: OEM for System Builders, Network Infrastructure for resellers, and Mobility.

More information can be found on the Microsoft partner Web site.

22

Business Practices and RecommendationsBusiness Practices and Recommendations

This training represents incremental services revenue for SBS partners.

Train customers on how to use RWW and Windows Mobile powered devices

Think of Windows Mobile-based devices as an extension of the computing platform you support and an opportunity to sell additional products and services.

Treat Windows Mobile powered devices as an extension of the infrastructure environment

Many customers require greater degrees of communication and hand-holding than when deploying SBS 2003.Be prepared to answer customer questions

Partners who speak about mobility at events get an average of at least one new engagement per seminar.Invest in seminars and other events

Perform early developments on a time-and-materials basis to gain familiarity. Once sufficient experience is gained, consider switching to a fixed-price approach.

Perform initial deployments on time-and-materials basis

Understand where Microsoft is going with its mobility and remote access products and technologies. Take advantage of Microsoft's carrier relationships to identify the right carrier partner.

Understand Microsoft's vision and road map

For partners who become agents, carriers add complexity to providing devices and services. Consider paying carriers for higher-tier support to get straight to a more experienced support representative.

Sign up for higher-tier support

Consider whether to become a subagent of a carrier or a master agent. Becoming a subagent allows you to command more revenue and to be a single point of contact for the customer. Not becoming a subagent eliminates the burden of activating and supporting devices and setting up carrier

relationships.

Determine if you want to become a subagent

Deploy mobile devices in house to gain experience prior to customer engagements.Use it yourself

Explanation and Actions to TakeBusiness Practice Recommendation

The following are business practices and recommendations gleaned from experienced partners

23

Situation AnalysisSituation Analysis

SMBs have an established need to stay in touch and access data from anywhere.

Since small businesses tend to be more nimble when deploying new technologies, greater opportunity exists in regions where small businesses account for a greater percentage of all businesses such as EMEA, Central and South America, and rural regions in the U.S. and Asia.

Partners have an opportunity to move beyond infrastructure and develop applications for Windows Mobile-based devices.

The mobility market is evolving, infrastructure providers are stabilising offerings, and standards are evolving. This can create confusion and lead to slower adoption rates.

Advanced 2.5G and 3G networks are still being rolled out in many regions, with incomplete coverage. This could limit usefulness of devices in these regions.

Partners need to learn to work with new ecosystem partners, including carriers, master aggregators, master agents and application developers.

23

24

ConclusionsConclusions

Mobility and remote access are growth areas in the IT market today:

– SBS 2003 addresses both, with Windows Mobile-based device support and inclusion of RWW.

Two types of revenue opportunity exist:– Driving increasing revenue for core SBS 2003 opportunities, including

improving partners’ competitive positioning, driving incremental SBS 2003 software and hardware, and providing additional opportunities for service, training and customisation.

– Incremental device margin and service activation fees. Partners must decide if they want to become a subagent of a

carrier or master agent and sell devices themselves, or to direct customers to another channel and focus on device installation and support.

The time to act is now.

25

Appendix

26

Windows SBS 2003 Product DescriptionWindows SBS 2003 Product Description

SBS 2003 Standard: network solution including the technologies of Windows Server 2003, Microsoft® Exchange Server 2003, Microsoft® Office Outlook® 2003, Microsoft® Windows SharePoint® Services, Shared Fax Services and Routing and Remote Access Services (RRAS)

SBS 2003 Premium: network solution including the technologies in SBS 2003 Standard plus Microsoft® SQL Server™ 2000, Internet Security and Acceleration (ISA) Server 2004, and Microsoft Office 2003 FrontPage® technologies

27

Microsoft Resources AvailableMicrosoft Resources Available

Partner training and resources on how to promote, sell, deploy, and manage SBS 2003 is available on the Microsoft partner Web site. The Small Business Specialist Community is designed to help

partners identify and address SMB requirements and to sell Microsoft products, such as SBS 2003, that are designed for SMBs.

As Microsoft partners grow, they can become Certified and Gold Certified partners in the Microsoft Partner Program. For SBS 2003, three competencies are key: 1) OEM for System Builders; 2) Network Infrastructure for resellers; and 3) Mobility

28

MethodologyMethodology

In 2004 and 2005, Microsoft sponsored IDC research to understand the increased deployment of Microsoft Windows SBS 2003 solutions in small businesses and related value-added offerings including CRM and business management. In over 100 in-depth partner interviews, IDC discussed with these partners the different paths to success they have found with SBS 2003 consulting opportunities.

IDC developed six separate guides, focusing on different areas of interest to SBS partners: This guide focuses on the opportunity for enabling

mobility, featuring Windows Mobile.

Other guides focus on delivering server solutions with SBS 2003, maintenance and managed services, customising Windows SharePoint Services, Microsoft Dynamics™ CRM 3.0 Small Business Edition, and Microsoft™ Dynamics GP.