Microsoft cuts BPOS price to squeeze Lotus

Microsoft cuts BPOS price to squeeze Lotus

Summary: IBM's Lotus unit, rather than Google, was the main target of Microsoft's price cuts to its online email and collaboration suite this week. But MS execs still happily turned their fire on Google in media briefings.

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While most observers portray Microsoft's sortie into online email and collaboration services as a titanic battle to keep Google off its productivity applications turf, the real target of this week's price reductions is IBM's Lotus unit. In a briefing earlier this week, Ron Markezich, corporate VP, Microsoft Online Services told me that most of his team's customer wins are at the expense of the IBM division: "Seventy-five percent of our enterprise customers are coming from a non-Microsoft platform — predominantly [Lotus] Notes."

The half-price reduction for hosted Exchange seats (from $10 to $5 per month) and a one-third cut in the cost of the full BPOS suite (from $15 to $10) is designed to keep those deals flowing through. IBM earlier this year introduced its own hosted LotusLive iNotes service at an aggressive $36 per user per year. Microsoft's old pricing was at a level destined to give prospects pause for thought. At $60 per year, it's close enough to raise fewer objections. The lower pricing will surely help, too, in those cases where Google's $50-a-year service is the competition.

Interestingly, we now have a market price established for online corporate email services in the $35 to $60 per year range (indicative of a new price range for all categories of enterprise software?). As Microsoft VP Chris Capossela told CNET's Ina Fried, "it's the price that customers are really excited to buy our suite at ... We're pretty excited about the price and not so much focused on free services or the price Google or others might charge." You bet.

Microsoft execs were happy enough to focus on Google when it came to throwing brickbats this week. Every briefing seems to have included a drive-by shooting directed at Google. "It takes more than a few billboards to win enterprise accounts," Markezich told me, in a reference to his rival's current 'Going Google' ad campaign. "There's been a lot of investment in billboards. I question how much investment there's been in enterprise capabilities."

There's also been a concerted effort to question the size of Google's paying customer base. While Gmail is hitting the volume mass market, Microsoft currently has the edge in large enterprise accounts. Google spent a lot of PR dollars to promote its recent win of a 35,000-seat account at Rentokil Initial, along with its 30,000-seat contract with City of Los Angeles. Microsoft Online Services is currently scoring much larger wins, including a 110,000-seat implementation at pharma giant GSK, a "large number" of which are already deployed, Markezich told me. He also disclosed the existence of a much larger, as yet unnamed customer, currently "in the midst of deployment" to more than 300,000 users.

Topics: Microsoft, Collaboration, Enterprise Software, Google, IBM, Software

Phil Wainewright

About Phil Wainewright

Since 1998, Phil Wainewright has been a thought leader in cloud computing as a blogger, analyst and consultant.

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4 comments
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  • Not for Smaller businesses

    A nice new angle to look at Microsoft's price
    cut. Microsoft is undoubtedly targeting the
    enterprise segment with BPOS, since in spite of
    the price cut, BPOS is complex and needs
    implementation support, and costs more from a
    total cost point of view. (Varguy reported a
    reseller made $167 per seat offering added
    services with BPOS.)

    Hence Lotus Notes is a more likely target, than
    Google Apps, which is yet to find its feet in
    the enterprise market. The following is a
    comparison of Microsoft BPOS and Google Apps
    from a small business perspective -
    http://bit.ly/2GZHbM
    pankajunk
  • RE: Microsoft cuts BPOS price to squeeze Lotus

    05/11/2009

    Mr. Wainewright,
    je m`exprime en Fran?ais parce que c`est ma langue maternelle.

    Personellement je trouve votre id?e exellente en ce qui concerne Lotus et IBM.
    Je me situe du cot? de Microsoft Corporation et j`offre mon soutient et celui d`Infotek Developpement ainsi que celui d`Infotek ITPS Departement ...
    Un peu d`histoire, qui a rendu possible le fait qu`aujourd`hui en 2009 presque chaque foyer du moins au Canada poss?de son propre ordinateur.
    Microsoft ...
    Ce sont eux qui ont rendu possible cet ?venement grace a Windows le plus utiliser de tout les syst?mes d`exploitations avec leur accessibilit?.
    Rappellons nous aussi que des compagnies comme IBM qui n`?taient pas a l`aise avec cette soudaine popularit? de l`ordinateur devenue un moyen pour tous et toutes d`avoir a la maison son propre PC domestique.
    Qu`ont il fait?
    Ils ont fait voter par le congr?s une lois Anti Trust pour enlever a Microsoft le droit d`avoir le monopole avec Windows sur la concurence.
    Aujourd`hui Microsoft est un Holding qui controle plusieurs Multinationalles.
    Je suis tout a fait d`accord avec Microsoft de vouloir leur faire mordre la poussi?re.
    Derni?rement IBM ma fait une offre de partenariat que j`ai d?clin? en raison du fait que Microsoft et Infotek sont partenaire depuis un bon bout de temps.
    Petite histoire non de succes story, mais plutot informative.
    Un jour, alors que je consultais mes emails je me suis aper?u qu`il y en avait un de Microsoft.
    Il ?tait ?crit " If youre life is important for you click here.
    J`ai donc cliqu? et me suis retrouv? en plein examen pour IT Professionnel ...
    En Anglais en plus.
    Au lieu de changer de page j`ai choisie de passer cet examen.
    Ils sont tr?s habille les gens qui travaillent pour Microsoft Corporation, en effet les premi?res pages ont un choix de r?ponses.
    ?a parait plus facile mais excusez moi car je ne peux en dire plus confidentialit? oblige...
    Le dessus je vous laisse et n`oubliez pas qui sont vos vrais ami (es) dans le domaine de l`informatique et aussi plusieurs autres domaines ( Aide directe aux pays pauvres ).

    Alain Beaulieu
    alain020@...
  • RE: Microsoft cuts BPOS price to squeeze Lotus

    Excellent post, Phil. It certainly is interesting to watch how much of an investment all of the big vendors are making in cloud-based email. At a minimum, it's good that customers are getting more choice in this market.
    nrmehta
  • Price cut makes others throw in the towel

    We're seeing more interest in Microsoft's services lately. Moreso from very large enterprises. But also seeing other internet service providers we (a Microsoft Online Partner) have been working with defer their hosted exchange to Microsoft.

    The price to value is really significant when you consider the stability, security, and features (large mailbox, etc).

    Ali
    thedinman