Microsoft Partner Initiatives, Pricing Take Shape

By Darryl K. Taft  |  Posted 2008-07-08

Microsoft Partner Initiatives, Pricing Take Shape

HOUSTON - Microsoft started its Microsoft Worldwide Partner Conference 2008 with a series of announcements including a new pricing and partner model for Microsoft Online Services, as well as other announcements around the company's effort to focus on a software-plus-services strategy.

Indeed, during the opening keynote address, Stephen Elop, president of the Microsoft Business Division, announced the pricing and partner model for two new suites of subscription services as part of the Microsoft Online Services family, which delivers software as a subscription service managed from a Microsoft data center and sold by partners. With Microsoft Online Services, customers have the option to access messaging, collaboration and communications software over the Internet. These services will be sold as a suite or as stand-alone products with prices starting as low as $3 per month, the company said.

"Our vision is that everything you can do with our onsite servers, you will be able to do with our online services," Elop said. "For partners, it's about the differentiated value they can deliver on top of our services, as well as providing them with an ongoing revenue stream. There is incredible partner opportunity at every level--integration, migration, customization, consulting services and managed services."

Under the new business model, partners selling the two suites will receive 12 percent of the first-year contract value with a recurring revenue stream of 6 percent of the subscription fee every year for the life of the customer contract, Elop said. Moreover, to help partners get the guidance for discovery, enrollment and activation of the two suites, a new program was announced called Quickstart for Microsoft Online Services.

Taking a swipe at Marc Benioff, chairman and CEO of, Elop said, "There are some self-proclaimed industry luminaries who say software is dead," he said. But there will be software on client devices and on all manner of machines, he said. And "some business applications will be completely built and deployed in the cloud," Elop said. He said Microsoft believes that people want the power of choice to decide how they want to deploy software solutions. "There is a huge opportunity here, he said, noting an IDC study that said Web deployment of business applications will grow by 32 percent by the year 2011, while Gartner said by 2011 all new deployment will be Web-based.

Meanwhile, Elop, who joined Microsoft six months ago, said that during the process of interviewing for the job and doing his own due diligence on Microsoft, he learned about the strength of the business and the health of Microsoft and its ecosystem.

"There are 500,000 partners working with Microsoft," Elop said. "And for every one dollar of revenue Microsoft generates, partners generate seven dollars."

Elop also said he learned a lot about the dedication and competitive spirit of Microsoft and the company's desire to win, along with the company's intellectual integrity and capability to recognize problems. Elop said he had a three-hour interview with Microsoft Chairman Bill Gates before getting the job. "Bill gave an unambiguous and fresh assessment" of the biggest challenges facing Microsoft, Elop said. In addition, Elop said he learned that despite the views of many in the industry, Microsoft does indeed innovate.

"We have an opportunity for impact with disruptive forces like software plus services," Elop said. "Microsoft will lead through these disruptive times."

Democratizing Technology

Meanwhile, Microsoft is building on the success of its early access program involving 200 partners, and the general availability in April 2008 of Microsoft Dynamics CRM Online to announce a program expansion and related readiness tool. 

The new Microsoft Partner Program will provide discounts to qualified partners in the United States and Canada for use of Microsoft Dynamics CRM Online in their own organizations. The discounted price is $19 per user per month and will be available in fall 2008. The new Microsoft Dynamics CRM ISV SAAS (software-as-a-service) Readiness tool extends Microsoft's Innovate ON program, helping ISVs evolve their on-premise solutions into on-demand services.

In addition, Microsoft officials said the company has seen growth in the adoption of its unified communications platform and products, including Microsoft Office Communications Server 2007, Microsoft Office Communicator 2007 and Microsoft Exchange Server 2007. Microsoft Office Communications Server alone has experienced triple-digit business growth over the last two quarters year over year and is licensed to 35 percent of Fortune 500 companies.

Partners are playing a role in this, Elop said. For instance, more than 150 partners have achieved the Voice specialization; more than 2,500 partner companies have achieved the Unified Communications Solutions competency; and more than 90 companies have joined the Notes Transition Partner Program to assist businesses that are migrating to the Microsoft platform, Microsoft officials said.

Meanwhile, Microsoft on July 8 introduced the WVCC (Windows Vista Compatibility Center) beta. Through this new compatibility tool, Microsoft will work to solicit continuous feedback from consumers and partners to ensure that their purchase and adoption experience remains positive long after their migration to Windows Vista. Microsoft also announced Windows Vista Small Business Assurance, a resource for partners to assist small-business customers interested in migrating from Windows XP to Windows Vista.

Also on July 8, Microsoft announced the BizTalk Adapter Pack 2.0, which enables partners to create value-added solutions for line-of-business system interoperability--including SAP, Siebel and Oracle application suites -- with any .NET Framework-based application. And with this, partners can develop interoperable adapters to complement the Microsoft offering using the WCF (Windows Communication Foundation) Line of Business Adapter SDK (software development kit), allowing customers to connect mission-critical data across applications.

Microsoft also announced its new Mobile Readiness Program at the conference. The program has four components:  The Get Mobile Ready initiative offers Microsoft consulting to small and midsize resellers; the Try and Buy initiative deploys Microsoft mobility solutions within resellers to create SMB mobility experts around the globe and help partners showcase the technology in action; the Microsoft Partner Program Mobility Competency is a full-scale resource to train and certify resellers that are ready to take the next step in mobility; and Microsoft distributors worldwide are offering solutions to help resellers provide their SMB customers with a ready-made package of mobility offerings at a competitive price.

And to help improve the purchasing experience, Microsoft added to its licensing options. Following on the Select Plus volume licensing plan Microsoft announced on July 1, the company announced additional updates to the Open Value program for small and midsize customers and Microsoft Financing solutions for customers of all sizes to help them balance growing technology needs with more flexible, manageable and predictable purchasing.

"Partners have always been at the core of Microsoft's business model, and that will never change," said Allison Watson, corporate vice president of the Worldwide Partner Group at Microsoft. "Today we are excited to announce new business models for our online offerings, which will drive opportunity and profitability for our partners, while delivering incredible value and choice for customers."

Added Elop: "We are democratizing the use of technology."

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