Today, 90% of small and midsize businesses run on the Microsoft platform, says Mika Krammer, an analyst at Gartner, a research firm. That’s a stranglehold on this enormous market of 8 million companies in the U.S. and 40 million worldwide. Globally, these companies pay almost as much for info tech — $400 billion a year — as America spends on defense. But despite its long history of dominance, Microsoft faces a looming threat from Linux and the insurgent open-source “free software” movement. Linux could do what the Justice Department couldn’t: end the era of Microsoft’s near monopoly and strip a sizable chunk of its sales and profits in the coming decade. Many industry analysts and media critics think that Linux is more secure and reliable than Windows, a prime target for hackers. Entrepreneurs have been paying close attention to the debate. Two of their biggest role models — Amazon and Google — now rely on Linux to run their websites. At a Yankee Group conference in San Francisco in March, small-business owners commiserated with one another about Microsoft’s disappointing customer support and their dislike of paying licensing and upgrade fees. They griped about how Microsoft’s new releases often seemed more like beta software — test versions with plenty of kinks — than reliable finished products, and they bemoaned the software’s vulnerability to viruses and the constant need for patches.
Microsoft divides this huge market into two parts: The 7.5 million “small” businesses with fewer than 50 employees, with no more than 25 PCs and with a maximum of $5 million in annual revenue. The 330,000 “midmarket” companies with fewer than 1,000 employees have up to 500 PCs and up to $500 million in revenue.
The smallest businesses probably don’t have a PC network or even a professional info-tech employee. These start-ups can benefit from Small Business Center (formerly bCentral), a set of Web-based services hosted by Microsoft on its own computers. The pitch is that it’s like hiring Microsoft to be your info-tech department for a monthly or annual rental fee, usually after a 30-day free trial. First developed in 1999, the services — aimed at businesses with fewer than 25 employees — have quickly become popular, attracting more than 2 million users in the U.S., Microsoft says.