Microsoft Extends Services to the Cloud

UPDATED: Redmond announces two new cloud services for businesses.


How much can change in a year? If you're Microsoft, quite a lot, even in the area of how it deals with partners.

Microsoft (NASDAQ: MSFT) kicked off its annual Worldwide Partner Conference in Houston, Texas, Tuesday by announcing two new cloud-computing online services: Exchange Online Deskless Worker and SharePoint Online Deskless Worker.

The two new services are designed for workers who need to access functions such as e-mail, calendaring, and collaboration. Because those users typically don't have a need for a dedicated computer, access to those capabilities are provided via "the cloud."

Last year Microsoft officials delivered new and updated management products as well as development kits to help partners deliver applications on top of Office. This year's keynote focused on fleshing out the company's evolving software-plus-services initiative.

Microsoft's latest move in providing hosted services "in the cloud" comes as the company begins to fulfill the first stages of its "software-plus-services" initiative. That project has two distinct brands: mostly-free Live services for consumers and fee-based Online Services for Business for business users.

As Microsoft moves into hosting enterprise applications in its own datacenters, the company cuts into the revenue streams of partners who self-host those same applications. So even as it drains away revenue from partners, the company is getting creative about trying to keep from losing them altogether.

"It's certainly a touchy subject" with many partners, Charles King, principal analyst at Pund-IT, told InternetNews.com. How they'll respond is yet to be seen, of course.

The company already offers other Microsoft-hosted Online Services for Business offerings, including Exchange Online, Office SharePoint Online, Office Communications Online, and Office Live Meeting.

This year's Worldwide Partner Conference keynote was headlined by Stephen Elop, the new president of Microsoft's business division. Elop, previously COO at Juniper Networks (NASDAQ: JNPR), replaces Jeff Raikes, a longtime Microsoft executive who is retiring in September to take over the CEO's position at the Bill and Melinda Gates Foundation.

Company officials also tried to reassure partners that it doesn't intend to drive them out of business -- not yet anyway. In the world of software-plus-services, Microsoft sees the mega-datacenters it has been building as providing the cloud to run those services.

"Our vision is that everything you can do with our onsite servers, you will be able to do with our online services … 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," Elop said in a statement.

So Microsoft's emerging new relationship with hosted services partners, to some extent, turns them into an extended field sales staff.

"Revenue sharing is a very smart move on Microsoft's part," King added. Additionally, that leaves room for partners to provide consulting and ongoing maintenance and management functions, he said.

That doesn't necessarily mean that all will go smoothly. Still, the announcement included the basic terms.

"Partners that sell the Microsoft Business Productivity Online Suite, Deskless Worker Suite or any of their components receive 12 percent of the first-year contract price and 6 percent of the subscription fee ongoing ... [which] can translate into 18 percent of the subscription value in the first year of the partner’s relationship with the customer," the company said.

For more than a year Microsoft has talking about providing hosted services "in the cloud." In February CEO Steve Ballmer outlined how he views Microsoft's software-plus-services vision.

Last fall Microsoft announced its overall Online Services for Business brand.

Although it started out saying those services would only be available to businesses with 5,000 or more seats, this winter, the company changed its mind and said it will market those services to all comers -- large, medium, and small businesses.

Meanwhile, Microsoft's hosted Dynamics CRM Online Service for Business went live this spring.

"They're trying to create a market where they [Microsoft and its partners] can make money together," King said.

The Deskless Worker Suite is scheduled to be available in the first half of calendar year 2009, a Microsoft spokesperson told InternetNews.com. Redmond will sell the two as the Deskless Worker Suite priced at $3 per user, per month.

This suite will provide e-mail, calendars, global address lists, antivirus and antispam filters, as well as Outlook Web Access Light, according to a company statement. Microsoft will also bundle four of the existing Online services for $15 per user, per month.*

*Update corrects price of online service bundle.

TAGS: cloud computing,Microsoft,SaaS,SharePoint,Exchange

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