Beyond Binary

Microsoft is aiming to release an update to its Windows Home Server product ahead of Windows 7's commercial launch in October. The Power Pack 3 update includes improved support for Windows 7 and Netbooks, among other features.

(Credit: Microsoft)

Microsoft on Friday said it has launched beta testing of a new update to its Windows Home Server product.

The software maker said in a blog post that "Power Pack 3," as the feature pack is known, will add improved compatibility with Windows 7 and Netbooks, as well as improved backup of TV shows.

Power Pack 3 will be a free update for existing Home Server owners, Microsoft said.

"Timing of the Power Pack 3 final release has not been determined," Microsoft said. "With your help to test the beta, we hope to release the update prior to the Windows 7 general-availability date of October 22."

Pitched as a way to manage multi-PC households and backup data, the notion of a home server has been a tough sell. Microsoft first announced the product at the 2007 Consumer Electronics Show.

The last update to Windows Home Server, Power Pack 2, was released in March. An earlier Power Pack update, released last year, fixed an important data corruption bug.

With its first update to Windows Home Server, Microsoft has fixed a critical bug that threatened to undermine the product's main utility--securely and reliably backing up computer files.

But the software maker still has to find an answer to the bigger problem--many consumers have no idea what a server is and fewer still have any reason to think they would want one in their home.

Microsoft tried to make fun of the notion of a home server with a faux children's book. However, it faces the real challenge of trying to convince consumers that they want to install a server at home.

(Credit: Microsoft)

Microsoft knew it would face this challenge even before Bill Gates announced the product at the 2007 Consumer Electronics Show. It even tried to make light of the issue, penning a fake children's book dubbed "Mommy, Why is There a Server in the House?"

Unfortunately, the child's question is still a prescient one. For many who need to back up their files, network-attached hard drives offer a less costly and intricate answer to installing even a simplified Windows Server. As a result, the product has proved to be a tough sell.

"This is a very difficult product category to be selling," said Forrester Research analyst J.P. Gownder. "Consumers, generally speaking, don't know what a home server is."

Microsoft insists that its sales, as of June, remained ahead of internal targets, though it won't give any specifics. Home Server marketing executive Steven VanRoekel told CNET News in January that as of that point, the product's sales had reached the tens of thousands. It's not clear whether they have advanced far, if at all, into the next order of magnitude.

IDC is projecting that home servers, including those running Linux, will only add up to 78,000 devices this year. "We have it growing fairly modestly," said IDC analyst Richard Shim, noting that IDC is forecasting the home server category will only get to 1.1 million devices by 2012.

Microsoft has also failed to get much excitement from within the industry over its approach to home servers. The only big-name U.S. computer maker that uses the operating system is Hewlett-Packard, which sells the MediaSmart server.

Retailers have had a tough time trying to come up with a sales pitch that works in-store. As a result, the product is mostly sold online.

"It's basically Circuit City and online," said Forrester's Gownder. "You are not seeing it on store shelves."

Select Best Buy stores are also selling HP's home server, although the No. 1 electronics retailer has not broadly started carrying the product.

Microsoft Senior Product Manager Joel Sider said the company expected it to take time to gain support both in the industry and with consumers, but said the company hopes to see additional makers add Home Server products in the coming year.

"It is a new product category," he said. "The awareness is growing at a good, steady pace."

Fixing the data corruption bug was an important step, Sider said. "Certainly it's great to get that behind us and continue moving on."

Microsoft's target group is people with a home network, more than one PC and a lot of music, video, photos, and other files that they want to share. The problem, Gownder said, is that only the techiest of that bunch even know that a server could be the best answer. And even among those, Microsoft hasn't yet clearly demonstrated why it is better than other options, such as adding an external hard drive or network storage or using an online service.

The selling point of Windows Home Server is supposed to be its ability to do other things, but thus far, there has not been the proverbial "killer app."

"It solves an interesting problem in the home but its potential remains in the future," Gownder said. Among the things that Gownder said could boost adoption of Windows Home Server is if it could offer a simpler way to get commercial video, say, from Netflix or the cable company.

On that front, though, devices such as Apple TV and Microsoft's Xbox seem to have more traction. Others have taken a different approach on the backup front as well, such as Apple, which offers desktop-based backup through Time Machine and cloud-based storage via MobileMe. Microsoft, for its part, also has cloud-based options including Windows Live SkyDrive and Live Mesh.

If Windows Home Server is to stand out, Shim said, Microsoft must make Windows Home Server more like Windows is on the desktop--a place where lots of applications flourish.

"The only reason Windows is so popular and important is there are a ton of people developing for it," Shim said. Microsoft points out that there are already more than 60 applications made for Windows Home Server, with more in the works.

Microsoft said on Monday that it has released the first update to its Windows Home Server product. Power Pack 1, as the release is called, adds some minor new features as well as fixes a months-old bug that can lead to data corruption in some cases.

The software, which is available now from Microsoft's Web site, also allows the home servers to share data with PCs running the 64-bit version of Windows Vista. Although most Vista machines use the 32-bit version, the 64-bit is used by the same kinds of hard-core enthusiasts who have been the likeliest to give Windows Home Server a try.

at the Consumer Electronics Show in 2007, Windows Home Server is designed to act as a central repository and backup point for files and media, such as music, movies, and photos. I'll have a post up by Tuesday that takes a broader look at the product and how it is doing in the marketplace.

Aiming to boost the appeal of its Windows Home Server software, Microsoft is offering an update to the operating system that will add both fixes to the existing product as well as add-ons and new features.

Dubbed Power Pack 1, the software makes it easier to choose which files can be accessed remotely, and by whom, and also makes it possible to watch recorded TV programming remotely, essentially letting the Home Server act like a Slingbox of sorts. It also allows the Home Server's contents to be backed up to an external drive.

It's the first significant update to the operating system, which was at last year's Consumer Electronics Show and started showing up on systems last fall.

Until now, the product has been hard to find on retail shelves, but Microsoft product manager Joel Sider said that HP's MediaSmart will be at Circuit City stores this week and is expected to be on Best Buy shelves later in the month.

Forrester Research analyst J.P. Gownder said that the product has exceeded expectations, but noted that those expectations were extremely modest. Microsoft did not release exact sales, but the company's Steven VanRoekel said that it was in the tens of thousands.

Gownder said that Microsoft faces a continued challenge in marketing its home server, although he predicts significant growth in the market over time.

Power Pack 1, which eventually will be added to new systems and be a free download in the spring for existing Windows Home Server owners, also allows those running the 64-bit versions of Vista and Windows XP to connect to a home server. While use of the 64-bit operating systems are not all that widespread, they are more common among the hardcore enthusiasts that have made up many of the early buyers of Windows Home Server-based products.

The update also brings support for Chinese and Japanese languages.

Microsoft has largely succeeded in getting a PC into the home, but its effort to put a server there will be an uphill battle.

Bill Gates announced the product to much fanfare at last year's Consumer Electronics Show. However, even folks who are bullish on the concept, such as Forrester Research analyst J.P. Gownder, say it's destined to be a niche product for years to come.

In a soon-to-be-published research report, Gownder figures that home servers (not just those running Microsoft's home server product) will reach 4.5 million households by 2012. That's up from just 190,000 such servers last year.

"That's a pretty good growth rate," Gownder said, though he added that "it's still a niche product, at that point," with his forecast representing home servers in only about 3 percent of American homes five years from now.

Gownder said the rise in multiple-PC homes, the increase of broadband, and the fact that people now store their music and photos on computers creates the necessary conditions for a home server to be practical. "We really are at a point in history where a home server might actually make sense," Gownder said.

But, he said, it's still a tough sell. Most people don't know what a server is. And even those who do have an understanding of servers from work may not have such a favorable impression. "They know that it goes down sometimes," Gownder said. "They know that it causes problems for them."

The one thing that could speed up the slow path to the mainstream, Gownder said, is if a cable company or other TV provider chose to deploy home servers as part of their service.

That concept is not so far-fetched, he said, given the fact that providers are having a tough time keeping up with on-demand TV requirements as content shifts to high definition. Such an approach could lead to growth 10 times what Gownder has forecast.

Microsoft has its own challenges with its Windows Home Server software. The company has struggled to get it into products and onto retail shelves. Hewlett-Packard delayed its shipment until late last year, and few other big-name computer makers have followed with products of their own.

The biggest recent news was negative, with the company announcing a bad bug that could lead to file corruption and data loss. Not exactly the kind of news that makes Middle America want to rush out and buy one.

Microsoft's Steven VanRoekel said the product's sales have exceeded the company's expectations, though he declined to give specific numbers.

"It's definitely tens of thousands," VanRoekel said, "which in a month and a half is good."

One area that Microsoft may look at to boost the popularity of the Home Server is having the software work better in households that have both Macs and Windows PCs.

"That's something we are taking a close look at," VanRoekel said, though he added that Microsoft has "nothing to announce."

Bill Gates announced Windows Home Server to much fanfare at January's Consumer Electronics Show.

The energy seems to have dwindled some during the product's elongated path to market over the past year. Microsoft finalized the code back in July, but HP said it would wait for an update to the software before releasing its MediaSmart server, in what was seen as the biggest endorsement of the product.

On Monday, Microsoft announced "general availability" for the software, although HP's product will not be shipping to consumers until later this month. Some servers from smaller computer makers have been available for a short while, though it's not totally clear what marks today as the day for general availability.

Medion and Fujistu Siemens still plan releases in Europe later this year, while Iomega's product is not aimed for arrival until next year.

Even when HP does start shipping its MediaSmart server in the next few weeks, the product is not expected to be a staple on store shelves. CompUSA is planning to sell it in some stores, while Circuit City and Best Buy are only committing to online availability for now, according to Microsoft. Other online retailers, such as Buy.com and Amazon.com, are also expected to sell HP's server, while Microsoft is holding out hope that retail availability will improve later in the year.

Amazon has started taking preorders for HP's server, which as of mid-morning Monday had climbed to the top of Amazon's best-seller list in the computer category.

The idea of a simple server to serve as a repository for media such as photos, music, and video holds some appeal, but it is something most consumers are going to have to learn more about and see and touch before being sold on the idea. That's going to be tough to accomplish with limited marketing and limited retail presence.