Microsoft Corp. Wednesday announced the 10th member of its Windows Server 2008 family with a new version of the server operating system aimed at companies with fewer than 15 employees.

Windows Server 2008 Foundation is intended for small firms without dedicated IT staff but that want to store files, share printers, host software and serve as Internet gateways.

It will come pre-installed on low-end servers, which have fallen drastically in price in recent years along with other PC hardware.

Hewlett-Packard Co. plans to release a server with Foundation pre-installed for under US$1,000, according to Julius Sinkevicius, director of product management for Windows Server at Microsoft.

Microsoft has sold a Small Business Server product for almost a decade. The latest Windows Server 2008 version supports up to 75 users.

But Microsoft CEO Steve Ballmer argued that there was a need for an even lower-end offering from the software maker.

"If somebody can buy a $500 [hardware] server, they're a little loath to spend $500 for the server operating system that goes with it," Ballmer told analysts in February.

Foundation servers will compete with servers running the free Linux operating system, such as IBM's similarly named Lotus Foundations server appliance.

IBM first announced the for-fee Lotus Foundations product in January 2008. It is also aimed at small businesses. Like Foundation Server, it is being sold primarily through resellers and system integrators.

The difference is that Lotus Foundations comes as an all-in-one appliance, with a number of features and applications pre-installed in addition to Linux. They include Lotus Notes e-mail and collaboration and Symphony productivity software.

Foundation comes alone without any bundled apps.