Microsoft's decision to slash cloud sales commission incentives on Office 365 for its partners is opening the door to market share losses to rival Google, according to a CRN quick poll of solution providers.
With Microsoft's recent cuts on cloud-computing sales commission incentives for Office 365, 34 percent of solution providers polled by CRN's Channel Intelligence Council, an exclusive community of solution providers providing feedback on channel issues, said in a random survey that they plan to add Google Apps For Business to their product portfolio. The survey results come after CRN reported that partners that sell Office 365 and other cloud services in Microsoft's Advisor Enterprise Agreement Deploy program expect to see their incentive payments drop as much as 40 to 50 percent.
The Microsoft cloud sales commission cuts on Office 365 are also fueling partners to increase their recommendation of Google Apps For Business, according to the CRN survey. In fact, 70 percent of partners polled said they plan to increase their recommendation of Google Apps for Business in the wake of the Microsoft sales commission incentive cuts on Office 365.
One sign of the increasing momentum for Google Apps For Business: CDW, No. 8 on the SP500 with $10 billion in annual sales and one of Microsoft Licensing Solution Provider (LSP), announced Tuesday that it is now offering Google Apps For Business. The announcement follows Microsoft recent move to cut LSP commissions by 1 to 2 percent in fiscal year 2014.
"CDW is just the tip of the iceberg," said the CEO for a large SP500 company that maintains Microsoft's failed channel strategy has resulted in a wave of partners adding Google Apps for Business. "At the end of the day, partners are going to go where the money is. Profitability is the most important thing. We are going to where the money is. Microsoft continues to cut the commissions for partners. You can only squeeze the lemon so much."
On the other hand, the CEO said, Google is offering good incentives for partners, and the Google Apps technology is comparable to Office 365. "I know enterprise customers who have abandoned Microsoft, ripping out every Microsoft product inside their technology portfolio, and went to Google Apps 100 percent," the CEO said. "Google Apps is enterprise ready."
A Microsoft spokesperson said in an email response that it is "inaccurate to state that all Office 365 incentives have decreased. We have made some incentive changes as a result of updates to product pricing and mix; yet, many of these have increased in value as changes were implemented. In fact, our overall cloud-focused incentives (of which Office 365 is a part) have doubled year-over-year in terms of dollars and a percentage of the overall incentive mix. And Microsoft provides more incentives than any other vendor in the industry."
As to the results of the CRN poll, the Microsoft spokesperson said that "many of our partners sell a diverse portfolio of technology solutions to meet customer demands. However, Office 365 is Microsoft’s fastest-growing product ever, and this is in large part due to the strength of Microsoft’s channel partner program. In the past year, we’ve seen twice the number of partners selling Office 365 than in previous years. In fact, as of last year, the number of partners selling Office 365 surpassed the number of partners selling on-premises Exchange. And with more than 50,000 partners already using Office 365 to run their own businesses, we are confident our partners believe in the product and will continue to see growth and demand."
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