Last week, Microsoft released the latest version of its server operating system, Windows Server 2012, along with a number of related versions and variants. But one member of the new Windows Server family hasn’t shipped yet—Windows Server 2012 Essentials, Microsoft’s version of the operating system for small networks.

Many small networks get along fine without a server (and with cloud-based e-mail and collaboration, that number has been on the rise). But others still need the sort of network services that a server provides, and they just can’t choke down the administrative burden (or the license fee) for a full-blown Windows Server.

The solution for Windows users has long been to use one of Microsoft’s “lite” server versions: Windows Small Business Server, Windows Small Business Server Essentials, or in some cases Windows Home Server. But all three of those have been eradicated under the Server 2012 license model, and the new Server Essentials is heir to their converged bloodlines.

Currently in the “release candidate” stage, Server Essentials is expected to ship before the end of the year, packaged with PC server hardware and as a retail product and download. With a suggested retail price of $509 and supporting up to 25 clients and 50 attached client devices, Server Essentials isn’t so much a “lite” version of the Server 2012 operating system as a lightly abridged one that comes with a collection of pre-configured features.

The good news is that Server Essentials takes most of the guesswork out of installing a Windows environment for a small organization, while still offering most of the underlying features and administrative functions of the full-blown Standard and Data Center editions of Windows Server. It also serves as a gateway to Microsoft’s cloud services, including Office 365 and cloud backup services, making it relatively painless for small businesses to both plug into collaboration tools and ensure that important data is protected off-site.

Server Essentials also includes a number of features that appeal to home users, including shared storage and streaming for audio and video content through Media Server. And, like its predecessor Small Business Server 2011, Server 2012 Essentials provides a wizard-driven way to configure the server (and the network’s router, if it's a supported model) to provide both Web-based remote access to files and a VPN connection from the Internet.

Organizations that grow past the 25-user ceiling also get some good news: Microsoft will support an "in-place" upgrade from Server Essentials to Standard Edition that eliminates the hard user cap while retaining the same functionality. While Microsoft will only support the Server Essentials features up to a limit of 75 users and 75 connected devices, that's still a major improvement over Small Business Server—which offered no smooth upgrade path.

But with the good news comes the bad. Despite Microsoft offering a free version of Hyper-V, its virtualization hypervisor for Windows Server 2012, Hyper-V doesn't come with Server Essentials (though there’s nothing stopping you from downloading the free version and installing Server Essentials as an instance within it). There’s also no application server support within Server Essentials, though Internet Information Server is built-in.

And while the simple, wizard-driven administrative processes of Server Essentials are a blessing for many tasks, things go quickly awry when the wizard workflows run off the rails. In some cases, Server Essentials will be a blessing to Microsoft’s army of small business IT service providers as they generate billable hours getting small shops online.

One server to rule them all

Server Essentials is intended as a “first server”—and by “first,” I mean “only.” It comes with two installation options, both of which end with the server being the master of its domain.

The first install option is for a network without an existing Windows server of any sort. The other installation scenario is for networks with a previous installation of Windows Small Business Server. This “migration mode” is designed to provide a way for domain services, applications, and data to travel from an older Small Business Server or SBS Essentials server installation to the Server 2012 Essentials machine.

Don’t drag your feet, though—in “migration mode,” you have 21 days to move everything off your existing server to the new Server Essentials system. When the clock runs out, if your existing server is not removed from the local network, it will self-destruct (or at least be shut down by Active Directory).

Beyond its position atop the heap, Server Essentials actually offers a little more flexibility on how it is deployed than does the Standard edition of Server 2012. Essentials can be installed either on a physical server (with up to two processors), or as a virtual machine within the hypervisor environment of your choice. I tried a number of different test configurations and found that Essentials ran happily on the free Microsoft Hyper-V Server 2012 alongside another server and a few virtualized desktops on my modest test platform (a Dell PowerEdge 2900 with dual Intel Xeon 5130 CPUs that I bought on Craigslist for $700 and upgraded to 12GB of RAM). This virtual configuration adds another level of disaster recovery capability for small organizations; you can replicate the Server Essentials machine to a backup server live using Hyper-V’s built-in functionality, either locally or at another site.

It has also drawn the interest of several companies looking to provide Server Essentials as a hosted service, according to a Microsoft spokesperson. But it’s unlikely that many will follow through. That’s because, unlike the full version of Server 2012, Server Essentials has no reduced-GUI “Server Core” installation option. (Part of the reason for the full GUI is that Server Essentials uses Windows Terminal Services’ RemoteApp feature to allow remote administration of the server using Server Essentials’ Dashboard.) And you don’t just get the full GUI version of Server when you install Server Essentials—you get the full Windows 8 experience, including the Windows 8 app store.

The Dashboard

While Server Essentials comes with the full suite of administrative interfaces that the rest of the Server 2012 family has—including Server Manager and the PowerShell 3.0 scripting interface—its primary face to administrative neophytes is called Dashboard. Once you install Server Essentials, its Dashboard interface provides a check-list for server configuration and access to a series of simplified screens with information about devices on the network, shared storage, and users. You can also connect to Microsoft Online Backup Service (Microsoft’s cloud backup) and download add-in products from Microsoft Pinpoint (Microsoft’s marketplace for small business software and IT services). To use Pinpoint, however, you need to disable much of the enhanced browser security in Internet Explorer 10 so that administrative users can download and install software.

Fresh out of install, Dashboard offers up a checklist of tasks for an administrator to complete. Each item (adding user accounts, setting up shared folders and backup, etc.) launches a simple “wizard” workflow that will guide an administrator with even the most basic of Windows skills through most of the tasks unscathed—with the possible exception of setting up Server Essentials’ “Anywhere Access” remote access service, which may require a bit more planning and networking skill (depending on how the local network is connected to the Internet).

The local backup service integrated into Server 2012 Essentials, Server Backup, can be used to create a scheduled full backup of server data, including the operating system, to a designated backup drive (either an external storage drive, or an internal spare drive designated as a backup store). Once you have connected client systems to the server, you can also centralize backups of folders on PCs to the server as well.