SEATTLE–As Microsoft ratchets up its software-plus-services offering, the company will use its annual Office SharePoint Conference March 3 to announce that it is expanding its existing online services to businesses of all sizes.
Microsoft now plans to offer hosted Exchange Online and Office SharePoint Online together with Office Communications Online and Office Live Meeting, either as a suite of services or as individual service offerings, Eron Kelly, a director in Microsoft’s business online services group, told eWEEK ahead of the conference.
Microsoft made its online services available to businesses with more than 5,000 users last September, and this announcement extends those services to businesses of all sizes.
The software giant will also announce a limited beta trial of Exchange Online and SharePoint Online to customers of all sizes March 3.
These services are expected to be generally available to businesses in the second half of the year, while the beta for Office Communications online will be available in the second half of this calendar year and available in early 2009.
The move is the first step in Microsoft’s bigger plan of making all of its software and server products available as a service, either hosted by the software company and its partners, or on-premises, Microsoft Chairman Bill Gates will tell attendees in his keynote address at the conference March 3, Kelly said.
Read here Joe Wilcox’s take on Microsoft’s hosting strategy.
But to Keith McCall, a former Microsoft executive and now the chief technology officer of Azaleos, which provides a managed on-premises Exchange solution, the primary driving force behind this push is for Microsoft to be able to compete with Google, which has been making inroads with its hosted e-mail offering.
“Both Microsoft and Google are stampeding to deliver hosted off-premises services, and partners in the path will have to get out of the way or get flattened. This is direct and clear competition and a channel conflict with those partners who have all offered hosted Microsoft Exchange via Microsoft’s Service Provider Licensing Agreement,” he said.
Microsoft’s new “resale” agreement likely will not be well-received by those hosting companies that have had to build up significantly costly infrastructures to support their customers, McCall said.
While Microsoft’s Kelly acknowledged that these services could compete with some of the company’s current partners, most of those partners were already looking at ways to differentiate themselves and their offerings from what will be a standardized offering from Microsoft, he said.
With regard to its existing hosting partners, Kelly said they will provide more customized experiences that are specific to certain verticals and integrated with their other services.
New Opportunities for Partners
In fact, Kelly argued, the move will actually create new opportunities for partners to resell, customize and provide consulting, migration and managed services, citing partners such as Getronics, HCL, Hewlett-Packard and Unisys, all of which have committed to supporting Microsoft’s online services and to rolling out offerings based on these new services.
“We did a survey of more than 700 partners, and the data showed that they expect 70 percent of Microsoft Online sales to be to new customers. Some partners also expect to boost the number of Exchange seats they will be able to sell in the first year by as much as 85 percent, and believe their support costs will drop by as much as 40 percent as they help customers manage their environment online,” he said.
Tim Woodcock, president of Courtesy Computers, is one such partner. He believes that his customers will continue to require support and setup services.
“I see a hosted Exchange solution as an opportunity for more revenue. Customers need to be mobile and their data needs to stay secure, and hosted solutions provide an affordable way for small businesses to get up and running and a great foot in the door for partners to support them,” he said.
Microsoft will also open a limited beta trial of Exchange Online and SharePoint Online to customers of all sizes on March 3. U.S.-based companies can register for the trial here.
“We expect that companies with dedicated IT staff will be first to embrace this technology. Users will be able to manage their services through a single Web-based interface, which allows IT professionals to monitor the performance of the services, add and configure users, submit and track support requests, and manage users and licenses,” Kelly said.
A number of large enterprises have already committed to moving their communications and collaboration solutions to Microsoft Online Services, including Coca-Cola Enterprises, Autodesk, Blockbuster, Energizer Holdings and Ingersoll-Rand, he said.
The software giant will also introduce a USL (User Subscription License) for these online services, which can be bought as a per-user subscription, Kelly said, but he declined to say what the pricing model will be.
Those customers who already have Client Access Licenses and Software Assurance will get a credit for that and be able to buy a Step Up USL at a lower price than the standard USL, so as to help them maximize their existing Microsoft software investments, he said.
Customers who buy an online user subscription will get the rights to the experiences in the cloud (online services) as well as access to the experiences that they run inside their environment (on-premises), he said.
“We believe that many customers will be buying and deploying SharePoint servers within their environment to do very specific scenarios, such as deep customization and integration with their line of business applications,” Kelly said. “But we also see them going to SharePoint online for their department-level portals and team sites, where they can take advantage of the rapid deployment we offer.”
Microsoft’s move will likely significantly boost the number of seats of hosted Microsoft Exchange, which currently stands at some 2 percent, or less than 2 million mailboxes, of the overall Exchange market.
“With this move, Microsoft will validate hosted services for smaller businesses, and is expected to drive hosted Exchange to between 10 and 20 percent of the market,” Azaleos’ McCall said.
