Voice Your Opinion on Microsoft's New Pricing for Hosted Services

Big news from the Microsoft World Partner Conference going on in Houston this week, a new pricing schedule for hosted software services.  I dilligently searched microsoft.com for an official press release that details the new pricing, but could find nothing.  According to Reuters (Microsoft sets pricing fee sharing for services) there are essentially two basic rates.  There is an "Information Worker" bundle which includes a suite of services, including Exchange, SharePoint, Office Communications Server and Live Meeting.  This appears to be the full featured package and will list for $15 per month per user.  There are two "entry level" packages described, "Exchange Online Deskless Worker" and "SharePoint Online Deskless Worker".  These bundles will reportedly cost $3 per month per user, but come with significant limits with regard to usage and functionality.

Probably just as significant as the end user pricing is the commission rate for partners selling these services: 12% of the first year contract value, with an additional 6% annual recurring payment over the life of the contract.

In addition to the pricing, Steve Ballmer made comments that were interpreted as a "warning" to partners to focus on SaaS.

If this isn't the tipping point in an inevitable migration to cloud computing, it certainly seems like a notable milestone. 

So, what is your opinion on the new pricing?  Record your vote in this poll, or post a comment to this blog entry.  For what it's worth, my personal opinion goes something like this:

- Before it even happens, Microsoft is already poised to be the biggest winner in this paradigm shift.  They have the infrastructure, the organization, the installed customer base and the war chest required to win the war.  More importantly, Microsoft has the applications and the products that companies and users want.  Google picked up a gem in the Salesforce.com acquisition, but is otherwise at least a decade behind Microsoft.  I would argue that Google is not even a legitimate contender in the space.

- As the presumptive winner, Microsoft has the ability to exact a tidy premium from early adopters.  I don't know that this pricing reflects that ability.  While not cheap, these services seem priced to move, or at least to stimulate demand.  I have to assume that there will be huge volume discounts for large companies.  My guess is that there are quite a few CIOs looking hard at these numbers today and trying to make the calculation work.

- These services will reportedly be hosted exclusively in Microsoft data centers.  Scaling these services to the SLA levels that customers require seems like an enormous challenge.  If Microsoft were worried about this, I would think they would use price to manage demand.  This pricing seems to infer strong confidence in the infrastructure.

- I am already sick to death of the SaaS acronym.  It is well on it's way to be more overused than "Web 2.0".  Since there seems to be no escaping it, could we at least come together and agree on a single preferred pronunciation?  Personally I prefer "sauce" over "sass", but the one version that cannot survive simply because it's unpronounceable is S+S. 

- This is great for SharePoint and businesses like ours that are focused on augmenting the platform. 

What do you think?  Post those comments, and vote in the poll.

More coverage:

Network World: Microsoft Reveals Service Bundles, Pricing

Techcrunch: Microsoft Launches Hosted Exchange Deals

Channel Web: Ballmer Warns Partners to Focus on SaaS

Posted Jul 09 2008, 04:06 PM by Steve Gaitten | Edit this post
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