Microsoft have announced today that they are cutting the price of the online services bundle including email, SharePoint and live meeting, known as BPOS by 33%. But in the fight to compete with Google is Microsoft missing the point. "Best practice" for picking and having a fight with a competitor dictates that you have the fight on your own terms and territory. For Microsoft in this space this would be to fight with Google in terms of application features, security, and Partner support of the solutions and interoperability of known and accepted de-facto office applications. For sure, the price difference cannot be too much but our sales team have been selling the value of our premium services for the last 5 years – and we are the biggest Hosted Exchange provider in the UK. So does this mean that Microsoft are setting their stall at the lower micro business, pro-sumer and small SME end of the business? If so, great, this leaves a space clear for Microsoft's Partners to carry on doing what they do best and service a segment that sees the value in high class service, support, integration and business process support. My big fear is that the "giants" give the whole industry a bad name, we are already seeing regular outages from Google, and more worryingly their attitude for Customer support, but if Microsoft are losing large amounts of cash on BPOS, and this price cut is going to make break even about 33% further away than it was, the service becomes poorly managed or becomes unreliable then all the doubters about the whole SaaS sector will have a field day and send businesses running back to on-premises deployments. Microsoft has made it much harder for everyone with this price cut. Traditional Partners who are selling on-Premises solutions will now be more challenged on price for solutions that can be delivered in both models, small hosters will be forced out of the business as they find it impossible keep re-investing for smaller returns and the larger hosters will continue to find alternative non-Microsoft applications as they search for margin and differentiation to avoid being collateral damage.
Mark
Hi Mark. I think you touch upon a valid point and subject. Microsoft has been losing the ground to Google for a long period now, and I believe the price is a natural element to compete. I strongly believe in disruptive business models, but unfortunately this business model is only disruptive upon Microsoft’s biggest asset – the partners.
How can an on-premise systems integrator compete against this? And don’t the higher tears mean more than the SOHO business market? This is not the last announcement we will see from Microsoft regarding the fight for cloud computing.
Posted by: Rasmus | November 03, 2009 at 11:44 AM
Microsoft's (Actually Steve Balmers) desperation to compete with Google has now reached a scale where partners no longer count. Are MS partners likely to see a reduction in SPLA licensing costs? I think not. Discarded in what has become a global war for dominance of the consumer market, partners are unfortunate victims in a larger war.
Personally, I'm inclined to believe the take-up on BPOS is far lower than expected, and this move is indeed desperate, as Mark suggests.. Heck, they are still looking for someone to front the operation: http://www.jobserve.co.uk/Head-of-BPOS-Global-Microsoft-Practice-Any-United-Kingdom-Base-Permanent-W416B50AB8BA0B252.jsjob
:-)
As Exchange hosters, it is time to re-evaluate our positions I think. If MS has shown us the door, so be it. Those crazy enough to hand over billing (and trust) of their customers to Microsoft, please go ahead...the rest of us more rational people, will keep evolving and providing a better and more varied service and rely on customers who are not completely cost driven and who understand that service and support are what count nowadays. There are many options, time to start exploring them methinks!
Posted by: John Butler | November 05, 2009 at 12:03 AM
According to ZDnet writers, this is more a move to target Lotus Notes than Google Apps. This is because most of BPOS converts are ex lotus notes users. I dont think Google Apps is much of a competitor for BPOS because Apps is more suited to small and medium sized business contexts (notwithstanding its efforts to project itself as an enterprise contender) while BPOS is too complex and feature rich for the SMB context.
See the following comparison of BPOS and Google Apps - http://www.hyperoffice.com/google-apps-vs-microsoft-bpos/
Posted by: Jordan Whiles | November 08, 2009 at 07:11 PM