Microsoft's Small Business Server is a remarkable hit, said a research firm Monday as it released the results of a survey that claimed an astounding 86% of small and midsize businesses either use the server bundle or are planning to deploy it. "Who knew this was going to be such as huge hit?" says Laura DiDio, the Yankee Group senior analyst who conducted the survey of some 500 small and midsize businesses, as well as resellers and consultants.

More than twice as many use or plan to roll out Windows Small Business Server 2003 than use or plan to deploy the earlier Windows SBS 2000, DiDio says, numbers that support the much better market performance of the newer edition of Microsoft's small-business bundle.

SBS 2003 comes in two versions, the $599 Standard and the $1,499 Premium, and incorporates Windows Server 2003, Exchange Server, SQL Server, Internet Information Server, Front Page, and the Microsoft Management Console. Premium adds Internet Security and Acceleration Server.

Microsoft literally owns the small- and midsize-business market, DiDio says, since competitors such as Novell Small Business Suite and Linux in general are barely a blip for these customers. Only 3% said they plan to purchase Novell's offering, while just 11% said they were using, or are going to use, the open-source Linux operating system.

"These customers don't care about the brand name," DiDio says. "Linux is not even on their radar, and actually, they don't even much care that SBS comes from Microsoft. They just want something that will be the most cost-effective and efficient."

DiDio credits resellers and consultants with the success of SBS 2000 and SBS 2003, not Microsoft. "Virtually every reseller we talked to was absolutely enthralled with the product and the money they're making" off it, she says. "You know what they say: 'Nothing says love like cold, hard cash.'"

Resellers and consultants, which sometimes dub SBS "Baby Back Office," praise the product in large part because of the revenue it has brought them. Among the more than 50 resellers contacted, sales increases averaged from 100% to 300% over last year because of SBS deployments and migrations.

"Linux and open source don't have anything that can compete with the bundled feature set of SBS 2003," she says.

But while Microsoft is making hay while the sun shines, DiDio has some advice for the Redmond, Wash.-based developer. "They struck gold here, but now they've got to do some concerted advertising around it to get the word out even more."

And Microsoft would be well advised to make other changes. "Microsoft's licensing model confuses a lot of these SMB customers," DiDio says. "The whole Client Access License concept is tough for them to understand."

Under Microsoft's licensing program, buyers of SBS 2003 receive five CALs with the server license, then pay $96 to $98 per additional CAL.

The success of SBS 2003 has been aided and abetted, DiDio says, by a general loosening of companies' purse strings. Companies surveyed said they were planning to spend 8% to 15% more on software during the 2004-05 time frame.

"We'll see wave of SBS deployments continuing right up through 2004 and 2005," she says. "No doubt about it, Microsoft was in the right place and the right time with this one."