Marcelo Calbucci

Startup Score:

Successes: 0.1+0.5
Failures: 1
In progress: 1

Thursday, December 13, 2007

How much does it cost to found a Microsoft-based startup?

 

    There is a lot of debate about running Linux or Windows on the enterprise. Usually, each side throws lines like "Linux is not really free" (because of Total Cost of Ownership), "Windows is too unsecure", "Linux is slow to fix vulnerabilities", "Windows is too expensive", yada, yada, yada.

 

    But what if you are starting a new tech-company? In other words, a lot of the points of the discussions above are null. All the IT will be done in-house by experts (your team), the systems will be tight-secure because you know how to disable services and close the unneeded ports. Etc.

 

    Ok, so if security, reliability and functionality are not an issue, what is it? For me it ends up being two simple things: Knowledge and Price.

 

    Knowledge is simple. If you know Windows, use Windows. If you know Linux, use Linux. If you know both...

 

 

Microsoft's Price Sucks for Startups!

 

    I envy the LAMP guys, not because of the technology which I think is slightly behind Microsft's (VS + C# + .NET), but because they have way less concerns about pricing and licensing.

 

    Let's hypothesize that you are starting your own web-based technology company. You and 2 other friends get together and make the big decision to do this. Two of you are developers that will work on the product, one will be the business guy. You guys didn't make the promised millions of dollars in stock options so it's not like you don't have to worry about paying the bills.

 

    If you are a web-based tech company, this is the minimum (debatable) hardware and software requirements for you:

 

  • 1 Server running Windows Small Business Server 2003 for Email, SharePoint, Domain Controller, etc.
  • 1 Server running W2K3 Server as the front-end for the web-based app.
  • 1 Server running W2K3 + SQL 2005 as the backend
  • 2 Desktop machines for Development, with VS 2005 Pro, Office 2007, Windows XP
  • 1 Laptop for the business guy, with Office 2007 + XP

 

    A few assumptions about this scenario is that Source Control will be done in one of the existing servers and through some Open Source option (like SubVersion or CVS), because Microsoft Source Control solution is just outrageously expensive, you'll be buying your servers without software and that you are using a co-location facility.

 

    How much will all that software cost? $7,775 according to Amazon.com's price.

 

    That is for software alone! This is a pretty hefty price tag for a bootstrapped startup.

 

    The problem is that Microsoft prices its product mostly for Enterprise consumption. Do you think Boeing cares if the $5,000-dollar server they just bought comes with a $900 Windows Server license? Maintaining that server alone will cost an extra $5,000 over the course of 3 years, so the price of a Windows Server is less than 10% of the TCO of it.

 

    But startups don't think like that. 3 years? We might not be in business so I can't use that kind of math. I wish Microsoft would have some kind of special discount or package for startups and don't tell me about the Microsoft Empower for ISVs because it doesn't apply for web-based applications.

 

 

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