A few months ago, Comcast swooped in with an offer some small businesses couldn't refuse: e-mail, calendaring, and document sharing, all courtesy of Microsoft.
Best of all, it's all free -- up to a point, anyway.
For small businesses that sign up for Comcast's broadband service, which starts at $60 a month, those customers get a suite of services called Microsoft Communication Services that are based on Microsoft Exchange Server 2007, Microsoft Office Outlook 2007, and Microsoft SharePoint Services 3.0.
Up to eight users, the service is free. Beyond that, the cost is $3.99 or
$6.99 per user per month, depending on the services ordered.
With the Comcast deal, Microsoft made a pre-emptive strike against Google, whose Web-based Google Apps represents a threat to Microsoft's software hegemony. The Standard Edition of Google Apps is free, but the company charges $50 per account per year for its Premier Edition.
Cable offering up apps
Comcast's goal was obviously to drum up more business from firms with fewer than 20 employees, aka small to mid-sized businesses. As Comcast president Bill Stemper puts it, small and mid-sized businesses 'are the heart of the country -- law firms, medical offices -- these folks that not only have people in all sorts of different locations and in mobile offices, but key partners not in their location.' Stemper adds that people who work in large firms often take for granted that they have an IT department that does the work for them, but small firms often need all the help they can get.
In fact, when Comcast made the announcement in November that it planned to offer such Microsoft services, the company positioned itself as the IT department for small businesses. As part of the push, the Philadelphia cable operator hired 750 salespeople and 1,200 technicians to develop business services and pledged to spend $3 billion going after small and mid-sized business customers.
Stemper estimates that there are five million small and mid-sized businesses with fewer than 20 employees in the company's coverage area, which represents a $12 billion to $15 billion market.
Telcos getting in on the act
Comcast isn't the only one going after that audience. Competitors on the cable side include Cox Communications and Time Warner Cable as well as telcos like Verizon, AT&T, and Sprint. Incumbent phone companies stand to lose as many as 1.5 million small-business phone lines, according to Insight Research Corp., of Boonton, N.J.
Nevertheless, so far no one has tried to match Comcast's offer. 'Comcast is the only one, the only major ISP to be doing this,' says Patti Reali, principal analyst at Gartner Group, of Stamford, Conn. Even so, in a December report, Maribel Lopez, an analyst at Forrester Research, of Cambridge, Mass., says that while Comcast will have to work hard to change the perception that it's merely a provider of pipes rather than business services, she also recommended that Comcast should go further by adding mobile services to the package and CRM and payroll software packages.
Stemper says that for now the company is focusing on e-mail and collaboration tools, which have supplanted security as the 'must-have' applications for small and mid-sized businesses. Says Stemper: 'We're always looking to see which new services make sense.'