Partners: Microsoft MSP Offering Priced Too High

At its worldwide partner conference last month, Microsoft unveiled System Center Remote Operations Manager 2007, a solution that uses Microsoft Operations Manager 2007 (MOM) to provide remote managed services to midmarket and SMB customers that have a System Center Essentials 2007 server installed at their premises.

Remote Operations Manager licensing is available only through Microsoft's Service Provider License Agreement (SPLA). Monthly recurring costs for each server managed are $13.85 per month, or $166 per year, and each client managed is priced at 55 cents per month.

For System Center Essentials, which the VAR can either purchase or resell directly to the end user, the price tag is $2,000 plus Software Assurance, which covers 10 servers and 50 clients, with additional servers priced at $100 for a perpetual license.

One Microsoft Gold partner said the fact that many SMB customers have multiple sites could make Microsoft's MSP offering prohibitively expensive.

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"Over a five year lifecycle, the upfront cost of System Center Essentials may not be a big deal, but Microsoft is forgetting that many partners end up ditching whatever platform they're on every few years, which means first year expenses are very important to profitability," said the source, who requested anonymity.

In contrast, MSP Zenith Infotech's model of $10 per server per month includes an antivirus license, and for $37 per month, Zenith will actually resolve any server issues that come up, the source said.

But John Joyner, senior architect at ClearPointe Technology, a Microsoft partner in Little Rock, Ark., and an early tester of System Center Remote Operations Manager 2007, says the pricing isn't unreasonable in light of the capabilities it offers to partners.

For example, Remote Web Workplace, software that's installed at the customer's location, gives service providers the ability to remotely control customers PCs without requiring a VPN or direct connection to the customer's network, said Joyner.

"We feel the software is priced fairly. Our current customers that are paying for a seat in a MOM infrastructure are going to pay about the same, or even a little less, with System Center Remote Operations Manager 2007," Joyner said.

System Center Remote Operations Manager 2007 is part of Microsoft's push to bring technologies that were previously available only to enterprises down to small and midmarket customers, said Jeff Campbell, director of product management at Microsoft.

As such, Microsoft will continue to look at the pricing model as it relates to the lower end of the market, Campbell said.

"The monthly cost of $13.85 for ROM is [priced] right. The System Center Essentials pricing, as you scale down to smaller clients, starts to get a little bit out of whack, and that's definitely something we are looking at internally," said Campbell.

Stephen Moss, COO of NSPI, a security solution provider in Roswell, Ga., is excited that Microsoft is stepping up with an MSP tool for partners, but said the strategy needs more refinement.

"The problem is, they haven't developed a plan for how to come after service providers, because this is a different type of sale than just a license sale," he said. "For solution providers trying to make margin, Microsoft will have to find the right pricing model."

System Center Remote Operations Manager 2007 was released to manufacturing in July and will be generally available this fall.

Detailed information on System Center Remote Operations Manager 2007 has been scarce, available only on a cryptically titled and sporadically updated TechNet blog titled "Remote Managed Services", run by Dustin Jones, program manager at Microsoft.