Microsoft’s prices have always been geared to be affordable for the masses. And when entering a new market, it seems to always start low-ball. Microsoft today finally revealed how it will price online services, including Exchange and SharePoint, and how it will share revenue with partners. The company used its annual Worldwide Partner Conference to detail two bundles of services, one that targets workers who spend little time with a PC and one tailored for “information workers” that includes collaboration tools, portals, instant messaging/presence and Web conferencing. When doing the math for Microsoft’s new services bundles, has it continued with the affordable theme? The jury is out.
An “information worker” bundle will be priced at $15 per month (and includes hosted versions of Exchange and SharePoint services with the not-yet-popular Office Communications Server and Live Meeting). Given that the average enterprise refreshes its desktops and software every three to five years, this equates to $540 per user for a three-year cycle. Will that save you money over the per-seat licenses you pay for now for Exchange?
If desktop support really does go away because users are getting the service from the cloud (but come on, how likely is that?), then this is probably a bargain. Hardware costs are killed — that’s true — but they are relatively cheap these days and network costs could rise. High-volume deals can certainly do better than $15 per seat, too.
The entry-level services fee at $3 per user, per month, seems more in line, but the limited service may not fit the average enterprise. And of course, Microsoft’s channel gets hosed when an online service is only $36 per user, per year, and includes no hardware. At 12% for the first contract and only 6% in years after, it takes an awful lot of users to make a living selling the Microsoft cloud. Microsoft resellers tend to service the small business, not the enterprise, so it’s hard to see how they will benefit from this pricing scheme, except if they can tack on additional service fees to the sales. In that case, buyer beware.
Even so, a much bigger concern for all users will be data portability. How will Microsoft “lock in” its customers once they move to the cloud? Will it hold customer data for ransom, or will a customer be able to grab its data and switch vendors anytime it wants to?