Microsoft plans low-cost server OS

Microsoft is readying a new low-cost version of Windows Server to give customers a server OS similar to client OSes that run on low-cost PCs.

Microsoft plans to release “something akin to” a netbook version of Windows, but for servers, not PCs, over the next month or two, Microsoft CEO Steve Ballmer said on a call with members of the financial community on Tuesday.

He said that although there is not high demand at the moment for netbook-like server hardware, declining prices in the server market make a low-cost OS an attractive option for customers.

“We don’t exactly have a netbook phenomenon, but if somebody can buy a [US]$500 server, they’re a little loathe to spend $500 for the server operating system that goes with it,” Ballmer said.

He described the software as a “low-cost, low-price, low-functionality Windows Server SKU” called “Foundation Edition,” but did not offer more details.

Microsoft also posted a blog entry on its Windows Server Division Weblog reiterating Ballmer’s comments, but still did not provide specifics about the product.

Microsoft has a range of Windows Server offerings to suit the needs of different customers, but Forrester analyst Chris Voce said the company sees a gap in its portfolio at the lowest end of the market. For some customers, even its Small Business Server product — which bundles Windows Server with Exchange Server, SQL Server and other software — is too much, he said.