Microsoft on Monday officially launched hosted versions of Exchange and SharePoint, two of its biggest on-premise cash cows, and continued to drive home the message that channel partners have nothing to fear from Microsoft's plan to move all its enterprise apps to the cloud.
Exchange Online and SharePoint Online are part of Microsoft's Business Productivity Online Suite (BPOS), which also includes Live Meeting and Office Communications Server, although the latter is still in beta and won't be available until next spring.
At a launch event in San Francisco, Stephen Elop, president of the Microsoft Business Division, said companies can reap cost savings of between 10 and 50 percent by moving to Microsoft-hosted SharePoint and Exchange services.
Microsoft's launch last month of the Windows Azure cloud-based development platform marked a significant step forward for Microsoft's Software Plus Services strategy, which blends on-premise software with Microsoft-hosted apps delivered over the Web from Microsoft's data centers, Elop said.
Microsoft has already sold more that 500,000 seats of Exchange Online since making it available to enterprises last year, but has also seen "a tremendous amount of interest" in BPOS from companies of all sizes, Elop said. More than 1500 companies have signed up for the Microsoft Partner Program for Microsoft Online Services since its launch in July, he added.
In July at Microsoft's Worldwide Partner Conference, some solution providers were upset by the commission structure for BPOS as well as by Microsoft's revelation that it would take over control of billing customers.
Exchange Online is priced at $10 per user/month, SharePoint Online per user/month is $7.25. Office Communications Server Online will be $2.50 per user/month, and LiveMeeting will be $4.50 per user/month. Microsoft will offer these services in one-year automatically renewing agreements.
At the Monday launch event, Elop insisted that Microsoft has maintained "a deliberate dependence" on its partner ecosystem by offering VARs the chance to develop recurring revenue streams.
To illustrate what Elop described as the "absolutely overwhelming" channel response to Exchange and SharePoint Online, Microsoft had several partners on hand to discuss deployment scenarios. These case studies helped underscore Microsoft's mantra that VARs can adapt their business models by focusing on value-added migration and customization services.
"The whole world is changing. It requires change, but it's representative of what's going on in the market today," said Elop.
Adam Smith, director of marketing at Phase 2 International, a Honolulu, Hawaii-based solution provider, says in the current economic environment, his customers are finding it easier to pay a monthly subscription as opposed to a major one-time capital expenditure.
Smith admits that the Microsoft's WPC announcement was initially ominous for Microsoft hosting partners, but said the practical realities of deploying on-premise Microsoft apps quickly dissolved those fears.
"We've never had a customer who was satisfied with an out-of-the-box, Microsoft application," Smith said. "Every customer, without exception, has required some level of support, training, integration, or customization."