It's the big news at the Microsoft WPC conference. Microsoft's selling their own hosted versions Exchange and SharePoint, dubbed the "Deskless Worker Suite", and now we know the price. I should say, the bigger news is really about what Microsoft partners will get. $3 a month per user for deskless SharePoint and Exchange. If partners resell the full boat of Online SharePoint, Exchange, Office Communications and Live Meeting, the cost is $15 a month per user. Partner's cut? 12% the first year, 6% the second year. Reseller partners are saying, Ouch! The shoe had to drop sometime and it seems it's hitting partners right on the head. So is the comet extinction event for partners here that some are calling this, or is it just natural selection at work with Microsoft playing the role of Darwin? I don't think the earth will cloud over and bring on the nuclear winter quite so fast as everyone's predicting. This is more of a tectonic plate shift with those living on the fault line as the casualties or being left to pick up the pieces and figure out where to go next.
Microsoft's given the market fair warning - they are going to do hosted Exchange and SharePoint. But there's more to understanding this than what's the partner cut of the transaction. Lets dive in.
Where's the Point of Sale? Where will be the primary point of sale for hosted Microsoft software? By "primary" I mean, where will Microsoft direct customers to make the sale. Online? Then partners are screwed, and they better offer some worthwhile value added services in order to capture some of the customer's money, if they can get in front of the customer. Through partners? That puts Microsoft at a distinct disadvantage against Google and open source where users can run or download apps on the fly without the delay of a middleman. That is unless partners add the value customers need. Maybe it's Microsoft online storefronts, where partners can present customers with their options of online Microsoft hosted software bundled or differentiated with the partner's services.
There's still a lot more we don't know about how online Microsoft software will be marketed and sold. If Windows Live, Office Live Workspace, etc, are any indication, hosted Exchange and SharePoint direct from Microsoft will be the direct sales model with partners looking for any place they can latch on.
How is Microsoft comp'ing their people? You've got to remember, it's not just the partner channel who is impacted by online Microsoft software. It's also the Microsoft sales force. They get compensated on sales too. That's was made clear to me today just talking a few minutes with some in the sales in their title. There's a reason useful expressions like "just follow the money" hang around after all these years. How will Microsoft comp their sales channel? And how will Microsoft deal with conflicts between on premise and online sales opportunities? I would imagine Microsoft will want to keep the on premise sales on premise as long as possible. That could be good news for partners in the short term, but may also just be delaying the inevitable. Smart money says both - line up to be a key channel for online hosted sales but milk on premise sales while you can. On premise can fund things while you're figuring out the hosted software partner model.
What's next? Are we going to see hosted SQL Server based storage services? Probably. Will Microsoft add their own cloud computing offering? Probably. I think we'll eventually see the entire suite of hosted data center software services from Microsoft, starting with online applications following the Software + Services model. I have no special inside knowledge of if that will happen or what those plans might be, but Microsoft isn't one to let someone else dominate a trend without adding their own offering to the mix.
Meanwhile... Partners' businesses won't change drastically right away. Moving to cloud apps isn't happening at a feverish pace, yet. But when they do, and I believe they will, it'll be too late for those who are just discovering it's hit that inflection point of rapid adoption. Time for partners to build the war chest to have the resources needed to figure out more than just a survival plan, but transforming the business and services they offer.
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Like this? Here are some of Mitchell's recent posts.
Apple Lemmings Lining Up For Friday's iPhone 3G
EMC Puts Microsoft Exec In VMware CEO Seat
Join The Microsoft Bloggers Network
Meet Me In Houston At Microsoft WPC
Live Mesh & Virtualization Saves Gas
5 Things You Need To Know About Hyper-V
Product Reviews:
Microsoft Live Mesh Google App Engine
LiveNewsCameras.com Xobni Outlook pluginRock Star jobs in SaaS: SaaS Jobs
Recent Converging Network Blog Posts:
Get Ready For XaaS Everywhere
Unbelievably Bad Web Password Security
Back From Hiatus, Saved by Web 2.0 Technology
It Takes a Village.. ah, actually, being there first and tons of hard workFavorite Book Recommendations:
The Big Switch
Zero Day Attack
Clear BloggingCheck out Mitchell's
Converging On Microsoft Podcast. Current Podcast Episode: Security Mike Gets Serious About SecurityAlso visit Mitchell's personal blog The Converging Network and SSAATY Security Podcast.
Visit Microsoft Subnet for more news, blogs, opinion from around the Web.
Sign up for the bi-weekly Microsoft newsletter. (Click on News/Microsoft News Alert.)
Are you a user, developer, partner, admin, or someone who likes to blog about Microsoft. Contact me about promoting your blog on the Microsoft Bloggers Network. The MBN is a free community service for bloggers who blog about Microsoft.
Mitchell Ashley is principal consultant at Converging Network LLC where he provides product, technology and social media consulting to emerging technology companies. A successful CTO and product innovator, Mitchell has created many successful, award winning products in the networking, security, convergence, Internet and IT industries. In addition to blogging for NetworkWorld, Mitchell regularly blogs at TheConvergingNetwork and co-hosts the widely popular StillSecure After All These Years podcast.
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The opinions expressed in this Weblog are those of the writer and may not represent the opinions of Network World.
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Partners Quake
Deskless, not diskless. Completely different business model, for completely different target
Error corrected.
Thanks for pointing out my error. I guess that's what happens when blogging from the WPC expo.
Fixed.
Mitchell Ashley
Converging Network, LLC
Personal blog: http://theconvergingnetwork.com
Personal podcast: http://www.clickcaster.com/ss
Error Corrected
Mitchell, I've read in other reports that the first year revenue share is 18% (12 + 6) -- do you think that is correct? I noted from your report that it was 12% the first year (also my takeaway.) Interested in your view on that. 6% on $15/month needs a lot of seats to be a relevant income stream...
who bills the customer owns the customer
if Microsoft wants to own the customer (like Google ) then there is no place for partners
the logic goes thus:- MS
the logic goes thus:-
MS partners target market = small businesses
small businesses = no implementation expertise
MS Online Services = Need implementation
therefore, MS Partners cannot be cut out that easily.
moreover, alternative products to MS offer a much better deal to small businesses. for example http://www.hyperoffice.com offers integrated messaging, collaboration and web conferencing.
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