Microsoft to sell hosted service subscriptions for $3 a month

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.

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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 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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26 comments
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  • With collaberative suites like Zimbra....

    why pay MS a dime. Even the smallest IT departments from 1 person on up can install Zimbra on a Linux box, spend $1000 or less on the hardware(for small business, a little more fore medium size business), set it up and walk away and forget it. It will provide all the collaboration any size company needs for the price of the hardware. Then keep all the money you would pay Microsoft in your bank account.

    With the OSS offerings today, any company is foolish to spend proprietary $ amounts and get ABSOLUTELY NO MORE productivity or efficiency.

    If you want to BURN MONEY that you do not have to, proprietary is definitely the direction you want to go.

    There is definitely still a need in very specific areas for proprietary solutions. There always will be. But these sort of ubiquitous services is NOT one of them.
    bjbrock
  • eWeek calls this an ELE

    ELE stands for Extinction Level Event.

    http://www.microsoft-watch.com/content/channel/microsofts_extention_level_event.html

    This dinosaur is due for a nap.

    Note to No Facts: You were wrong (again)

    -Mike
    SpikeyMike
    • Ummm..eWeek was referring to the partners going extinct, not MSFT

      And the reality is that this is a win/win. Microsoft's partners either make $0/mailbox for companies that go to Google or more than $0/mailbox if they sell Exchange Online. What's not to like about that?
      marksashton
  • gmail, google docs

    free, free

    (nobody needs microsoft apps anymore, maybe their free readers, lol)
    twiddly
    • dream on ...

      I get the biggest kick out of the "cloud" will save us we don't need the desktop apps anymore...oops the network plug was pulled, router went down, wireless signal just dropped...etc.etc. And BTW you need to add "beta, beta" to those above...
      ItsTheBottomLine
    • Gmail/Google Docs - $50/user/year

      Google Apps for enterprise customers cost $50/user/year. Microsoft is quite competitive with that price and offer better software/more features and no worries about Google snooping in your data because that's their whole business model.
      marksashton
      • LOLz You Believe M$ is Not a Snoop? :D

        Talk about gullible? ...big difference between Google snoop and M$ Super Snoopers!!! That being M$ has been Caught Snooping, Ripping, Stealing, Shredding, Hiding and Lying in court even! Name once Google has been accused of any of this and it's ever been proven?

        ...ah gee M$'s Bill Gates in the now infamous claim of parinoid amnesia in court for the umpteenth time, " a..a... I don't recall", after every question asked in Monopoly Proceeding! :D

        Yeah.....Google may be BIG and make lots of money, but that's where the comparison ends!!!

        That's the difference between a company based on Open Source Ideals and one based on making sure they keep all their deep dark secrets hidden from public view!!! ;)
        i2fun@...
        • Re: M$ is Snooper 2.0

          <strong><em>"...big difference between Google snoop and M$ Super Snoopers!!!"</em></strong><br>
          <br>
          <strong>The difference?</strong> M$ "<em><font color=red>Super Snoopers</font></em>" <strong>is now <a href="http://snoop.cdt.org/">snooper 2.0"</a>.</strong>
          n0neXn0ne
          • You trolls are hilarious and totally clueless

            The difference is Microsoft is offering true hosted services for your business no matter what size and this hosted model is not based on collecting your data for advertising purposes.

            Google's terms and conditions say:

            ?By submitting, posting or displaying Content on or through Google services which are intended to be available to the members of the public, you grant Google a worldwide, nonexclusive, royalty-free license to reproduce, adapt, modify, publish and distribute such content on Google services for the purpose of displaying, distributing and promoting Google services.?

            Microsoft does not have anything even remotely like this clause and is not interested in your business data.
            Martin_Australia
          • Clueless?

            "By submitting, posting or displaying Content ...[i]which are intended to be available to the members of the public[/i]"

            I think rather the clueless ones would be those putting their business data up for the public to view.
            *nixFan
        • Google based on "open source ideals?" Puleeze

          Google is based on the god of the holy dollar. They have the perfect PR spin with "do not evil" but meanwhile they're becoming the world's information storage house. They know where you shop. They know what you buy. They know the Web sites you visit. They know who you send email to. They know who you receive email from. And, to top it off, their ENTIRE BUSINESS MODEL is based on their collection of that information and making money on it by targeting ads. There's nothing secret about it.

          Oh, by the way, Microsoft's anitrust transgressions...as awaful or non-awful as people may think based on their point of view...took place more than 10 years ago. Water under the bridge for most (rational) people.
          marksashton
          • In addition ...

            for the fools claiming Google is open source, would you please show us the source code of their search engine?
            LBiege
        • Perhaps you should read this...

          http://www.pcmag.com/article2/0,2817,2325002,00.asp

          Google has been doing more and more evil these days. But with your rose colored glass on, you may have missed it.
          rkuhn040172@...
    • Google docs blow

      I'd rather use open office than that junk.
      LBiege
  • Typical of large companies

    Create an interesting product.

    Line up partners to sell it and create a market that is sustainable.

    Once the market is large enough, start to compete against your partners by offering prices lower to end user than what you charge "wholesale" to the partners.

    Drive partners out of the business, raise prices and declare that's how the the free market works.
    ThePrairiePrankster
    • Not an accurate representation

      What Microsoft is doing here is offering choice. Their end-customers have a chice of running MSFT software on-premises or acquiring it as a service hosted by partners or acquiring it as a service hosted by Microsoft. Compare that to Google: hosted by Google or nothing.

      Regarding partners, this is just a recognition that certain segments will move toward hosted services. Many will not because they want the control of managing apps like Exchange and Sharepoint themselves, within their own datacenters. Microsoft partners will still have plenty of success selling and managing on-premise solutions. For those end-customers who want a hosted model, the partner still makes money on referral from Microsoft. With Google they make nothing. All the money goes to Google.

      Regarding pricing, I don't see any price increases here. I see low prices ($3/user/month for mail and $15/user/month for mail + sharepoint + LiveMeeting). That's certainly much less expensive than what an end customer would spend purchasing and managing these types of workloads themselves. They save substantial amounts of money.
      marksashton
  • Apt description for current rivals

    This is actually a good thing, as it brings enterprise-class tools and products down to the smallest companies.

    It is up to partners to provide valueadd services on top of these offerings.

    Anyone know how 1, Market Street, Suite 300 in 'Frisco is taking this?

    BTW, You picked the perfect description for this event, Mary Jo!
    JohnObeto
  • RE: Microsoft to sell hosted service subscriptions for $3 a month

    And Microsoft is not going to snoop? You did read the terms of service, didn't you?
    doug@...
  • They will try to clobber UK again

    MS has frequently charged UK customers on the basis of $=? so we can expect them to offer the service in UK at ?3 which is equivalent to $5.90. I fear for the sanity of anyone prepared to be ripped off like that.
    misceng
    • Are you kidding, lets look at the cost

      $3.00/US per month/per user - no license fees and no support overhead. At $108.00/yr per person it is a bargain and guess what, no excuses for why mail or collaboration not happening.
      lostinparadise45