Monday, June 27, 2011

Will Microsoft Do Right By Their Partners? Office 365 Announcement June 28

Tuesday, June 28, Microsoft is going to unveil their new Office 365 program. Since their Office/BPOS program has been extremely unfriendly to their partners, I hope the rumors about this announcement are true.

The rumor is that Microsoft will stop trying to steal our clients, dramatically reduce our revenues, and turn us into competitors.


For a couple of years now, Microsoft has worked really hard to sell directly to end users and remove their "partners" from the business of selling software. Office "Live" has been a way to remove huge amounts of money from our pockets while selling directly to our customers.

Over and over I have been asked why I don't sell or push Microsoft's "Live" version of Office. The answer has two very simple components.

Reason #1: Revenue. With Office 365 I have been offered a whopping 6% times THREE years. This is on a $6/user license. That's $0.36 per month, or $4.32 per year. Every year. Year after year.

Personally, I have to compare that to the open license for Office Pro, on which I make about $100 profit. That's more than 23 Years worth of profit on one office license.

Reason #2: Owning the Relationship When I sell Office Licenses (Open or even OEM), I "own" the client. That means I ding the credit card. I deal with issues. I am the one they call. And when it's time to buy more, they come to me.

With BPOS and all of Microsoft's online services so far, Microsoft owns the client. They ding the credit card. If the partner changes, goes away, or just becomes an annoyance, then Microsoft continues their direct relationship with the client. We get our money on the back end at some point in the future.

Here's the official promotion for the announcement:

    Microsoft Office Division to Make Announcement
    June 20, 2011
    Steve Ballmer will announce news detailing the latest on Office 365 on Tuesday, June 28, at 10 a.m. EDT / 7 a.m. PDT. Watch the webcast here.

    - - - - -
    Office 365 Announcement Coming June 28
    Dear Partner,

    On Tuesday, June 28, 10-11 a.m. EDT, the Microsoft Office Division will release news detailing the latest on Microsoft Office 365, Microsoft's next-generation cloud service.

    Office 365 is the culmination of more than 20 years of experience delivering world class productivity solutions to people and businesses of all sizes. It brings together Office, SharePoint, Exchange, and Lync in an always-up-to-date cloud service. Learn more about Office 365 on the Microsoft Partner Network.

    Call to Action(s):
    Join the Virtual Event on Tuesday, June 28th from 10-11 a.m. EDT
    Join live via webcast at

No one seems to want to admit it publicly, but I think the MS Office team has had a real uphill battle for the last few years. I suspect that adoption has been much lower than they expected. In addition, I think MS leadership wants to have a clear "WIN" in cloud services -- and so far they don't have a single thing to point to.

Direct sales are probably going well. But partners aren't stupid, so they'll continue to make $80-100 per license rather than a few pennies. And partners aren't stupid, so they will jealously guard the client relationships on which they've built their businesses, rather than simply hand them over to Microsoft.

- - - - -

Stay tuned.

Mr. Steve Ballmer himself will be on this announcement.

And I hope the message is clear:

- You will be able to sell Office 365 (BPOS) through the licensing channel

- You will be able to decide the price at which you sell it to your clients

- YOU will own the relationship and Microsoft will not have a direct relationship with the client

Unfortunately, I also believe that your margin will be gone forever. Today the price is at $6/month. A few months ago it was $10. It will continue to go down, down, down. So even if you can maintain a 15-20% margin, it will be 15-20% of nothing.

One way or another, you won't be much of a partner.


1 comment:

  1. Google doesn't need partners.
    Apple doesn't need partners.
    Why should Microsoft?

    Not playing the devils advocate here, just saying that Microsoft has been clear at every WPC that they see partners moving to a different role on development and integration. If you want to be an intermediary middleman on licensing, you need not apply.

    If Microsoft goes back to leaning on it's partners it would have effectively ended their big bet on consumer experience with the cloud. "Cloud, so easy, you need a nerd for it."



Feedback Welcome

Please note, however, that spam will be deleted, as will abusive posts.

Disagreements welcome!