Microsoft's Yahoo Offer Sets Stage For SaaS Battle With Google

Tyler Dikman, the CEO of Cooltronics, a Tampa, Fla. solution provider, urged both Microsoft and Google to come to the table with a recurring revenue commission for solution providers to sell basic productivity software as subscription service. "I'm not a VAR that believes I should be paid for everything, but if I am bringing the customer to either Microsoft or Google they should give me a monthly recurring revenue commission," he said. "We provide a wide range of services to our customers and when all is said and done we need to be profitable. The more options we can provide to customers the better. This is a missed opportunity for both Microsoft and Google."

Solution providers said that currently neither Microsoft with Office Live or Google with Google Docs offers partners the opportunity to earn a monthly recurring revenue software as a service commission.

Dikman said he believes a Microsoft Office Live monthly subscription would drastically reduce piracy of Microsoft Office in small and medium businesses. "This is definitely where Microsoft needs to head, especially when you look at the outrageous price of Microsoft Office," he said. "I can say with certainty that at least one out of five systems we deal with has pirated Microsoft Office software. If you provide customers with a more attractively priced monthly offering it will cut down on piracy."

Dikman said customers would love the option of paying a monthly $10 subscription for Office with all updates rather than $400 for a packaged copy. He says it would also spark a huge uptick in Office upgrades. "Office 2007 is a great version of Office," he said. "The biggest problem I have is I have to save every document as an Office 2003 document instead of Office 2007 because most of the people I do business with don't have Office 2007 yet so they can't open those files. That defeats the purpose of a lot of the functionality in Office 2007."

"Software as a service is absolutely where Microsoft needs to be headed in order to get everybody on the same page," said Dikman. "I am certain more people would adopt Office 2007 if it was a software as a service offering."

"Both Microsoft and Google understand that its going to be a battle to get monthly subscription software service revenue from customers," said Glen Coffield, president of Smart Guys Computers, a four-store system builder chain based in Orlando Fla. "The question is which one is going to partner with solution providers like Smart Guys to drive that subscription revenue."

Coffield said a successful Microsoft acquisition of Yahoo would provide a platform for Microsoft to kick its software as a service (SaaS) plan into high gear, but the key is leveraging solution providers to sell a Microsoft Office Live monthly subscription. Of course, that would mean giving solution providers a recurring revenue commission. Not something Microsoft has been willing to do at this point.

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