Microsoft to sell hosted service subscriptions for $3 a month

Summary:For Microsoft resellers that had been fearing Microsoft would drop the bottom out of the hosted-services business with its Microsoft Online services offerings, their nightmares were realized on July 8. Microsoft is planning to sell Microsoft-hosted Exchange and SharePoint for $3 per user per month.

For Microsoft resellers that had been fearing Microsoft would drop the bottom out of the hosted-services business with its Microsoft Online services offerings, their nightmares were realized on July 8. Microsoft is planning to sell Microsoft-hosted Exchange and SharePoint for $3 per user per month.

Microsoft unveiled pricing and partner-commission details of its Microsoft Online family at the company's annual Worldwide Partner Conference, which kicked off in Houston this week.

Microsoft officials said it would provide a new low-end companion service, which it is calling the "Deskless Worker Suite" -- a bundle of Exchange Online Deskless Worker and SharePoint Online Deskless Worker -- for the aforementioned $3 per user/per month fee. Customers who want the complete Microsoft-hosted Business Productivity Online suite -- Exchange Online, SharePoint Online, Office Communications Online (for instant-messaging and presence) and Office Live Meeting -- will be able to subscribe for $15 per user per month. The company also will allow users who are interested in subscribing to individual Microsoft-hosted services to select that option, as well.

(Here's a good chart with the different Microsoft-hosted services pricing options in one place.)

Microsoft described its target market for the Deskless Worker products as "designed to meet the needs of deskless workers, those people who typically spend a small portion of their workday using a computer but still need to communicate and collaborate with colleagues and partners." In other words -- though not Microsoft's (public) words -- Microsoft is aiming at users who might be persuaded to move to Google Docs with its Deskless Worker line-up.

Over the past couple of years, Microsoft has been attempting to persuade its partners, especially those who've built businesses around hosting Microsoft software for their customers, that Microsoft isn't going to steamroll them with its new managed-service offerings. Microsoft execs have been warning partners to get out of the plain-old hosting business and to, instead, focus on more of the value-add they can provide on top of hosted services.

At the Partner conference, Microsoft execs told partners that they'd kick back 12 percent of the first-year contract price, and six percent of the ongoing subscription fee on these new Microsoft-hosted offerings. "This can translate into 18 percent of the subscription value in the first year of the partner’s relationship with the customer," Microsoft told partners via a press release it issued on July 8.

But some partners were caught off-guard when Microsoft told them earlier this year that the company had decided to provide Microsoft-hosted services to customers of all sizes, not just to Microsoft's largest customers, as it had indicated it planned to do previously.

Not surprisingly, some partners have been leery of turning their established customer relationships over to Microsoft. Many have built lucrative businesses around hosting Exchange, SQL Server and other Microsoft software and didn't expect they, as Microsoft "partners," would have to compete with Microsoft head-to-head in providing hosted services to small- to mid-size businesses (SMBs).

Any Microsoft partners or customers out there who want to weigh in on Microsoft's new hosted-services offerings, pricing and commissions?

Topics: Microsoft, Collaboration, Enterprise Software, Software

About

Mary Jo Foley has covered the tech industry for 30 years for a variety of publications, including ZDNet, eWeek and Baseline. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008). She also is the cohost of the "Windows Weekly" podcast on the TWiT network. Got a tip? Se... Full Bio

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