Hosting Partners Cast Wary Eye At Microsoft Office Live

Many of these hosting partners had been recruited by Microsoft to offer SharePoint- and Exchange Server-based offerings. But now that Microsoft is hosting its own low-cost collaboration, Web page creation and e-mail service, what are they supposed to do?

"Forge ahead," seems to be the operative response.

Asked why a VAR or carrier targeting the SMB segment should go with an Office Live alternative, companies like SMBLive and InfoStreet are ready with an answer: They are more channel-friendly and feature rich than Microsoft's nascent service.

"Office Live is at heart a direct play [and] not currently available for redistribution through the channel," said Matt Howard, CEO of SMBLive, a Rockville, Md.-based e-mail and collaboration hosting specialist.

"The fact is that small businesses with limited IT expertise have a real need today for simple-to-use software applications delivered as a service. Therefore, broadband providers, VARs and hosters need to move quickly to capitalize on this demand," Howard said, adding that SMBLive's SharePoint-based services have been available for some time and were built for the channel.

Small businesses are ready to to buy mail and collaboration as a service, and the technology is good to go, according to Howard. These companies want the benefit and glitz of Web 2.0-type applications but don't want to pony up for the IT infrastructure necessary to field them.

And carriers that have tried to force-fit e-mail technology into a package palatable to small businesses are now willing to look outside for solutions that will sell better in that market. What's more, as carriers see margins on core telephony businesses erode, many see a need to get into small businesses with additional services.

British Telecom and Telus offer SMBLive's services to small businesses. Telus, a Vancouver, B.C.-based carrier, is offering SMBLive direct to customers, for the most part, but also has a group of wholesalers and ISPs reselling it as well, according to Nathan Pitka, marketing director.

Howard said many carriers already deal with hosted Exchange, SharePoint and Live Meeting, but that much of the SharePoint collaborative foundation remains unused.

That fallow SharePoint, Howard says, remains a latent asset for these carriers. If they can find a way to sell it, they could profit from it. In Howard's view, SMBLive services will that asset marketable to small businesses.

Meanwhile, Microsoft's nascent Office Live and Windows Live software-as-a-service (SaaS) platforms -- built in response to the Google threat -- have put the software giant in a position to compete with hosting partners it had formerly wooed. The Redmond, Wash., company has for some time billed the SharePoint services that ship with Windows Server as the underpinnings for its own and third-party app development.

Marja Koopmans, Microsoft's director of partner development for Office Live, said this service offering is just another choice for partners.

"They can work directly with Windows SharePoint Services or choose to go with Office Live, which kick-starts a lot of the work they might otherwise have to do themselves," Koopmans said. "Atop all that, we'll also give [Office Live] partners access to our current customer base."

Microsoft's take is that there are so many small businesses underserved -- or unserved -- by technology needed to set up Web sites, e-mail and domain names that there's enough of a market for everyone. To better attack that opportunity, Microsoft inked a pact with Best Buy for Business to push Office Live services into small companies from select Best Buy stores.

Dave Grantz, CTO of Exchangemymail.com, an Albertson, N.Y.-based hosted mail provider, agreed that the SMB market is largely unsaturated. In addition, he said, Office Live is no big threat because although it's good for end users with very basic needs, it won't satisfy those used to richer mail experience, wireless connectivity and the like.

Critics say that while Office Live appears to be moving along, the same can't be said of Windows Live, Microsoft's proposed consumer-oriented service platform.

Last week, much was made of the fact that Microsoft Chief Software Architect Ray Ozzie didn't once mention Windows Live by name during a presentation at a Goldman Sachs event. Windows Live was similarly conspicuous by its absence in an analyst presentation by Microsoft evangelist Charles Fitzgerald the week before, industry sources said.

Then late last week, news surfaced that Blake Irving, corporate vice president of the Windows Live Platform Group at Microsoft, was leaving the company. No details were forthcoming, but several analysts said the Windows Live effort is struggling.

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