Craig,

For what Microsoft is up to with Small Business, see http://www.microsoft.com/windowsserver2003/sbs/default.mspx

2 weeks ago I pulled out an ancient Compaq PIII with 64meg ram that wasn't even worth trying to sell. We installed the Asterisk at Home distro on it. 2 unattended hours later we had a VOIP PBX that could handle at least 20 calls involving hundreds of extensions, automatically rout customers to the appropriate extension via caller ID, call attendant, fantastic voicemail, wake-up calls, etc etc- it can even read out the weather to us! Even after buying new phones and various cool bits we could expect to save $1000s compared to a commercial pbx. Then we discovered the distro also has e-mail service, web server, firewall and even a CRM system. It runs beautifully with 128M RAM, though we plan to upgrade to 256 to handle more calls. At this stage we're so pleased, we intend to give a donation.

My point? The above experience is not special. Setting it up was so easy- I'd always associated Linux with those awful command-line prompts. Nope, all done via GUI.

IMHO millions of businesses will be looking at this sort of thing if they are asked to upgrade OS and hardware. There is a kind of satisfaction reusing mothballed hardware- from my windows-centric viewpoint, I never expected to use that Compaq ever again. Now suddenly it is back in use- and it could double as a file server for any local files a company might use. ;-)

If there is even a grain of truth in the above, what products is MS going to offer to compete?

MS isn't stupid. They know that things change incredibly quickly and one of their strengths is the ability to react quickly- e.g. when they realized the direction they laid out for the Internet wasn't going to prevail. I certainly don't think it will hurt if people express an opinion. They may well ignore it- but then people are no worse off.