With all the talk about “Cloud Computing” at the moment you’d almost be forgiven that SMBs would be dumping physical server purchases by the bucket load to move to the new promise land of public cloud services!

This is one case of where the hype does not match the reality as highlighted by this article on the Windows Server Division Weblog, which points out recent IDC stats showing the biggest year-on-year server shipments in more than 5 years! As the article points out is that this is explained by the fact that businesses are in a different stages of their adoption of cloud services. A typical Microsoft Small Business Server is a multi-role solution within a single physical server and even shifting email services to Gmail or BPOS, still leaves you with file sharing, identity management/security, print sharing, remote access & possibly remote access, software deployment, policy management of desktops and possibly some line of business application (LOB). You could move your storage to the cloud as well and sync the data locally and there are solutions to do that but about your LOB? It might well be a bespoke solution which is not untypical in many businesses and so there might not be a cloud service doing quite what you want.

Sure, the cloud market is going to grow dramatically in SMB but there is going to be a process of organisations shifting to that gradually. There is still demand for physical servers as SMBs adopt virtualisation as they need new hardware capable of supporting virtualisation technologies from VMWare and Microsoft to do this.

Microsoft’s move to providing Azure as a platform for providing an environment to build cloud services is absolutely right because competitors like Google, Amazon Web Services, Salesforce.com and others are pushing hard on this.