Microsoft has done a lot right with its All In cloud computing strategy over the past few months. But The VAR Guy raised an eyebrow today when he noticed a big, bold pricing calculator on Microsoft’s BPOS Web site. On the one hand, the calculator makes a lot of sense as Microsoft wages a cloud war against Google Apps. But on the other hand, will Microsoft partners grimace as price becomes the default discussion point with end-customers? Here are The VAR Guy’s perspectives.
First, let the VAR Guy set the stage. Microsoft’s BPOS (Business Productivity Online Suite) Web site prominently displays partner resources for customers that want Exchange Online, SharePoint Online and other SaaS offerings. A sub-page helps end-customers understand the value of working with BPOS channel partners, including VARs and MSPs.
Kudos to Microsoft for putting such a heavy emphasis on its BPOS partners. After all, many software companies forget to mention — or purposely ignore — channel partners on their SaaS sales pages.
Money Matters
But here’s the challenge for Microsoft and its channel partners: Price is starting to dominate the SaaS conversation and even Microsoft knows it. That’s why Microsoft offers such a big, prominent, impossible-to-miss pricing calculator on its BPOS web site:
Partner Downside
By promoting a standardized price, Microsoft puts pressure on third-party service providers that offer Hosted Exchange, Hosted SharePoint and other Microsoft-centric SaaS applications. There’s also pressure on small VARs and MSPs that want to charge higher fees for a range of SaaS and managed services.
Still, The VAR Guy realizes why Microsoft so aggressively promotes its SaaS price points. The war is on with Google Apps, and just about every software company is feeling the pressure. Just last night, The VAR Guy ran into a source close to the Symantec MessageLabs team. MessageLabs competes against McAfee/MX Logic in the spam filtering and email security markets. But instead of worrying about Intel’s buyout of McAfee, the source close to MessageLabs was far more worried about Google’s Postini business, which appears to be undercutting Symantec Hosted Services and MessageLabs on price.
Alas, much of the SaaS conversation is shifting to price rather than value and services. That may not bode well for some VARs that made their living off on-premises Exchange and other traditional offerings.
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As a VAR, EPA is entirely dependent on pricing from the vendor (including Microsoft, one of our long-term partners) so selling on ‘price’ has never been a strategy. EPA is a 100% SaaS specialist, we work with promises not physical products. This requires trust, transparency and honesty. EPA concentrates on adding substantial value during the sales and support process; acting like a personal consultant during the sale and a dedicated technical engineer during support. This is how we efficiently execute our promises and demonstrate true value for money. EPA – Experts in SaaS Security and Archiving. http://www.epagency.net
VAR Guy,
Live by the sword, die by the sword. It is a shame that pricing is becoming the differentiator as there is much more that goes into the solutions being delivered. That being said, it is a battle ground, and unless you want to be in the main fight, better to look for a side skirmish where you can win. Translation for the VAR/Solution Provider? Look for upstream or wrapper services where you can still make money.
Microsoft does have to compete and there is money to be made, I just don’t believe Google, MS and others have worked out a complete and wholly channel friendly strategy quite yet. The strategy will get figured out, as it always does, but there may be some carnage in the near term. In the meantime, I will be looking for those skirmishes where I can win…
Good luck,
Gerard
President / CEO
MSP Services Network
http://www.mspsn.com
It’s great that Microsoft mentions partner support, but they fail to leave out the dismal margins they’re offering their BPOS partners. As you mentioned, they’re putting huge price pressure on these mailboxes – leaving no room for partners to generate a profitable annuity stream.
BlueTie’s partner program starts at 60% margin to our partners on our $5 MSRP mailbox and gets better from there as you drive volume. Those aren’t just POP boxes, those are business class boxes with 10 GB of storage, shared enterprise contacts and calendars, presence and instant messaging, tasks, files, and more. We also offer a variety of value added services like archiving and real time mobile sync – all with 50%+ margins.
Beyond that, our solution isn’t offered into the channel as an after thought – we built it for the channel. The entire solution is white label and carries no branding fee. As we like to say to our partners: Your Brand, Your Customers.
Visit bluetie.com/partners for full program details and you’ll see that with the right partner, there truly is a way for VAR’s to generate meaningful recurring revenue with SaaS email.
Shawn: Thanks for sharing your views. What types of solutions providers typically partner up with BlueTie?
-TVG
TVG: Thanks for asking.
Our solutions providers range in size from small 1 & 2 man shops to large providers with hundreds of employees and even into the large ISP realm. We pioneered the SaaS business class email space in 1999, and with 2 million mailboxes under management we’ve got the scale to support a wide profile of solutions providers.
The typical profile isn’t related to size so much as those who are interested in a fully white labeled business class email solution that allows them to create meaningful recurring revenue. We look at ourselves as a partner to our solutions providers rather than a vendor: assigning dedicated account managers, offering the best margins in the business, providing the capability to brand the application, and more.
If you, or anyone else, is interested in a full access demo please let me know. I am the Product Manager here at BlueTie and would be happy to show you around the solution: both from the VAR perspective and the end user experience. You can reach me directly at sryan@bluetie.com or 1.800.BLUETIE