Microsoft chops prices of its hosted enterprise cloud offerings

Microsoft chops prices of its hosted enterprise cloud offerings

Summary: Microsoft is cutting prices of its Microsoft-hosted Exchange, as well as its suite of business services (known as the Business Productivity Online Suite, or BPOS), and is refunding the difference to existing hosting customers.

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Microsoft is cutting prices of its Microsoft-hosted Exchange, as well as its suite of business services (known as the Business Productivity Online Suite, or BPOS), and is refunding the difference to existing hosting customers.

Microsoft is cutting its Exchange Online pricing from $10 per user per month to $5 per user per month. It also is cutting the price of the BPOS bundle -- which includes SharePoint Online, Exchange Online, Communications Online and Live Meeting -- from $15 per user per month, to $10 per user per month.

Microsoft is leaving the pricing for its Deskless Worker versions of its hosted Online offerings the same. Exchange Online Deskless Worker and SharePoint Online Deskless Worker remain $2 per user per month. The bundle of the two Deskless Worker offerings stays at $3 per user per month.

Not surprisingly, Microsoft officials didn't attribute the price cut to competition from Google Apps or other hosted offerings. Instead, they attributed the cuts to "rapid customer adoption, global scale and improved efficiencies from new software such as Exchange Server 2010" (according to the press release).

Microsoft is making BPOs available in 15 new countries before the end of the year. Later this week, BPOS will be commercially available in Singapore; trials are slated to begin in Brazil, Chile, Colombia, Czech Republic, Greece, Hong Kong, Hungary, Israel, Malaysia, Mexico, Poland, Puerto Rico, Romania and Taiwan. Commercial availability in India is also expected later this year, officials said.

Microsoft officials are now claiming to have more than 1 million paying users for Microsoft's Online family of services (not counting Live Meeting, for which there are many more paying customers, according to company officials). Newly signed BPOS customers include Hofstra University, Lions Gate Entertainment, McDonald’s Corporation, Rexel Group, Swedish Red Cross and Tyco Flow Control.

Microsoft will be adding a paid, Microsoft-hosted version of Office Web Apps -- the Webified versions of Word, Excel, PowerPoint and OneNote-- to its Online stable next year. Company officials have said that paid offering will also be available to Microsoft volume-license customers so that they can host Office Web Apps themselves, on-premises, instead of or in addition to allowing Microsoft to host it for them. There will be additional (and, as yet, still unannounce) features that will be part of the paid Office Web Apps offering that aren't part of the free, ad-funded version.

Microsoft is currently rolling out refreshes to its Online family of services every 90 days or so, according to Ron Markezich, Corporate Vice President of Microsoft Online. Some of the new features the company is rolling out to its on-premises software -- such as Exchange 2010 -- are debuting in the hosted, Online offerings before they are available to customers as server-based products. (The final Exchange 2010 software bits are slated to go to customers starting next week.)

I'm sure Microsoft customers will be upbeat about the price cuts for Microsoft's hosted offerings. But I'd think Redmond's partners who are trying to make money from selling Microsoft's hosted services (if not their own hosted version of Microsoft's wares) might be less enthusiastic...

Topics: CXO, Cloud, Collaboration, Microsoft, Software, IT Employment

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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23 comments
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  • Microsoft profit margins continuing the decline as the try to compete with

    companies from the next millennium.
    DonnieBoy
    • Declining profit margin

      I don't see declining margins being an issue.. Office desktop is still the premier product which most companies will shell out for. The only part of google that makes money is advertising which they have been trying to change for years ( eg skype purchase before)

      Whats more important is there technology and quality and how that stands over the next 10-15 years ( something Linux and Apple should be worried about as they are relying on 70s technology) .
      Consider Microsoft's positioning for critical technology

      OS - Windows 7 , CE/Windows Mobile , Midori coming in 2 years or so the only 4th gen OS around.

      Cloud services - Best cloud services product in the market. Including relational DB support.

      Applications and development - .NET platform and tools is very strong. probably equal to Java ( if you add VB, C# , Managed C++) . Also well positioned for functional languages.

      Web applications ASP.NET is strong

      RIA , MS has the best product in Silverlight though not the marketshare

      Internet Applications - BPOS

      So MS is quite well served in all the future AND traditional systems. As long as they can maintain best in class software companies will pay.
      bklooste
      • You're delusional

        [i]The only part of google that makes money is advertising which they have been trying to change for years ( eg skype purchase before)[/i]

        No, it's not.

        [i]something Linux and Apple should be worried about as they are relying on 70s technology) [/i]

        Google is doing good on that front but what you said about Linux and Apple is just plain BS.

        [i]OS - Windows 7 , CE/Windows Mobile , Midori coming in 2 years or so the only 4th gen OS around.[/i]

        Erm.. which one is the 4th gen OS here.. seriously let's just concentrate on reality instead of what they might some day produce. And they're not doing too well (7 is an ok OS.. nothing revolutionary).

        [i]Cloud services - Best cloud services product in the market. Including relational DB support.[/i]

        Debatable.. matter of taste I guess.

        [i]RIA , MS has the best product in Silverlight though not the marketshare[/i]

        Let's just say I disagree.

        [i]So MS is quite well served in all the future AND traditional systems. As long as they can maintain best in class software companies will pay.[/i]

        I don't think Microsoft has ever produced best in class software... and still a lot of companies pay. Many are starting to think the rational though.
        vmaatta
        • Get your head out of the sand boy!

          Whether we like MS or not you need to stop your MS hatred from deluding your common sense.
          Because very quietly and confidently MS HAVE set them selves up very very well for the future.
          Like you it caught me out..but I have to agree they are miles ahead of the competition in a lot of areas.
          So get your head out of the sand let your brain be engaged before your mouth, and that way we may all be able to contribute to the competition gathering the same momentum as MS.
          Richard Turpin
      • Where is ASP.Net strong?

        If you look at medium business, its everywhere.
        It is the successor to all of the
        VB6/Access/Excel 'development' of the 90's.

        But if you look at the Web 2.0 world, the only
        example I can find is MySpace, which seems to
        be in a loosing battle with Facebook and
        LinkedIn. PHP/MySQL is very strong in this
        space. So is Java/Scala. Surprisingly, Erlang
        is making significant inroads. Microsoft needs
        to make some progress with Ocaml, err F#, if
        they want a functional option to take on the
        high concurrency world of Erlang and Scala in
        Web 2.0.
        shis-ka-bob
        • you're kidding right?

          I've worked for the following companies in the last 15 years: American Express, Ultimate Software, First Data, Philips, GE; All big players in their respective markets, ALL using MS technologies.

          Open source might be free-- but you get what you pay for. Try and argue that with the armies of MS developers out there. And MySQL? You're kidding right? That's like comparing a Honda Fit to an Escalade. Yeah, one's cost effective, but given a choice, many would choose one over the other if money weren't an issue.

          kckn4fun
          • Cloud is the future...

            Cloud computing is coming and MS can see the writing
            on the wall. The old model (packaged software) is on
            its way out, hence MS investment in Azure, Web Office,
            etc.

            The problem is that for Google, developing Google
            Apps and other services is more or less a promotional
            exercise which they give away free or very cheap. For
            MS, this is their bread and butter. MS Office accounts
            for 1/3 of the revenues.

            In this new model, MS cannot charge exorbitant prices
            and so their future outlook is not so bright. This is
            reflected in their stock which has been in the toilet for
            over 5 years.
            prof123
      • Declining profit margin

        You've missed the point. Google may occasionally try to charge for a service here or there. But, in the GoogleSphere, software and services are free. Google is in the auction business, auctioning off ad space to the highest bidders. Google seems to have skipped the "Software as a Service" direct revenue model almost completely. And it seems to be working pretty well for them. They dominate in the monetization of online advertizing, and Google software and services help them maintain that dominance will simultaneously cutting into the competition that still depends on direct revenue from software and services.

        I don't expect Google to displace Microsoft in the Enterprise market anytime soon. But, well, Microsoft is a company firmly rooted in the nineteen eighties--highly stratified, undue amounts of overhead due to excessive micromanagement, run by old-timers (though that may be slowly changing). I think Microsoft's future prospects would be improved if they flushed the old-timers, knocked a few levels out of the hierarchy, brought in some fresh executive blood, and split up into several companies. These days, senior management teams that have been together for ten years are considered a bit long in the tooth and an impediment to innovation.


        zdnet-gregc
        • What an utter load of ageism BOLLOX's!

          Your naivety beggars belief maybe you should get a real job....all those daily soaps are getting to you.
          Richard Turpin
        • What an utter load of ageism BOLLOCKS!

          Your naivety beggars belief maybe you should get a real job....all those daily soaps are getting to you.
          Richard Turpin
          • Ironic.

            I hope you're on lunch break while posting that, LOL...

            (BTW: last I checked, jobs have been hemorrhaging out of the country, people are "overqualified" for many and for others they may have educating or training but "insufficient experience". It's all becoming a big joke. Anyone saying "Get a job" is being naive at best... Like the rest of us, living in a glass house and throwing stones as a hobby won't suit you well.)
            HypnoToad72
        • Ageism is rampant in IT. Even the non-managerial jobs are at risk.

          5 year tenures = "too costly".

          Ironically, people with knowledge who otherwise pass interviews but don't have empirical experience are shut out too.

          Talk about bollox... ;)
          HypnoToad72
      • Hmmm

        1. Microsoft =! quality. Too many products speak for themselves.

        2. Microsoft's product line, for each new version, seems to break all sorts of software and has to be re-programmed because, often, even for simple apps, Microsoft changes or removes commands and procedures that render manual conversion a requirement. Why no go to some of the .NET forums and have people who actually program this, from others, talk from empirical experience? I'm not the only one in this boat. And it's not limited to programming suites either.

        3. Silverlight is feature-rich, but going back to that pesky quality thang, why should I take your claim at face value? 20 years of experience with their products and you're not going to convince me overnight. Neither will Microsoft's products. Especially Vista and I've mentioned that situation plenty of times already around Zdnet...

        4. Best in class or best marketed? The marketers at my company froth over MS software, but are blind, deaf, and dumb toward the techs who go out of their way to point out it's not them. These products genuinely ARE flaky and bloated.

        Oh well.
        HypnoToad72
  • How does BPOS compare to GoogleApps

    MS BPOS presents a pretty good mix of applications that small businesses need and can now afford. I'd like to know what the costs are for consulting, setup, and end-user support. ie. the TCO for a 25 person company. There's a huge market for small business looking for a single platform if integrated collaboration tools.

    It will be interesting to see how MS BPOS will compete against GoogleApps. Here's a comparison table which also offers a 3rd option from HyperOffice - we have been offering a fully integrated suite of Exchange & Sharepoint, and web meeting alternative since 1998.

    Check out the GoogleApps vs. MS BPOS comparison here.
    http://www.hyperoffice.com/google-apps-vs-microsoft-bpos/
    skaviani
    • Nice plug :) (NT)

      NT
      vmaatta
    • Any comparison of LotusLive vs Google Apps vs MS BPOS?

      Does anyone have a comparison chart of LotusLive vs Goggle vs MS BPOS?

      LotusLive recently launched their iNotes eMail offering at lower price point. How much of MS price cuts should be attributed to the new LotusLive offerings?
      blwhite
  • Message has been deleted.

    tburzio
    • Deleted

      .
      Hallowed are the Ori
  • Power of Competition

    This is the power of competition from Google's push to
    corporate market. Google's recent success in California
    will lead to more success in more local governments and
    hopefully in Federal government too.

    Exchange service is very viable compete very very well with
    in-house service. For example, most in-house exchange
    hosted email systems limit users to something between
    100MB to 1GB of email storage. Microsoft offerings
    includes 100GB plus unlimited for all sent and deleted
    messages.

    Hurrah to both Microsoft and Google...
    Mshahsavar
    • That explains why wages go down and people stop spending. But it won't

      explain why, despite all the insurance companies out there providing "competition", double-digit premium hikes every year.

      http://en.wikipedia.org/wiki/List_of_United_States_insurance_companies#Health_insurance_.28major_medical_insurance.29

      ;) ;) ;)
      HypnoToad72