Microsoft Leads SaaS Discussion With Price: Good or Bad?

Microsoft has done a lot right with its All In cloud computing strategy over the past few months. But The VAR Guy raised an eyebrow today when he noticed a big, bold pricing calculator on Microsoft’s BPOS Web site. On the one hand, the calculator makes a lot of sense as Microsoft wages a cloud war against Google Apps. But on the other hand, will Microsoft partners grimace as price becomes the default discussion point with end-customers? Here are The VAR Guy’s perspectives.

First, let the VAR Guy set the stage. Microsoft’s BPOS (Business Productivity Online Suite) Web site prominently displays partner resources for customers that want Exchange Online, SharePoint Online and other SaaS offerings. A sub-page helps end-customers understand the value of working with BPOS channel partners, including VARs and MSPs.

Kudos to Microsoft for putting such a heavy emphasis on its BPOS partners. After all, many software companies forget to mention — or purposely ignore — channel partners on their SaaS sales pages.

Money Matters

But here’s the challenge for Microsoft and its channel partners: Price is starting to dominate the SaaS conversation and even Microsoft knows it. That’s why Microsoft offers such a big, prominent, impossible-to-miss pricing calculator on its BPOS web site:

Microsoft BPOS Price Calculator

Partner Downside

By promoting a standardized price, Microsoft puts pressure on third-party service providers that offer Hosted Exchange, Hosted SharePoint and other Microsoft-centric SaaS applications. There’s also pressure on small VARs and MSPs that want to charge higher fees for a range of SaaS and managed services.

Still, The VAR Guy realizes why Microsoft so aggressively promotes its SaaS price points. The war is on with Google Apps, and just about every software company is feeling the pressure. Just last night, The VAR Guy ran into a source close to the Symantec MessageLabs team. MessageLabs competes against McAfee/MX Logic in the spam filtering and email security markets. But instead of worrying about Intel’s buyout of McAfee, the source close to MessageLabs was far more worried about Google’s Postini business, which appears to be undercutting Symantec Hosted Services and MessageLabs on price.

Alas, much of the SaaS conversation is shifting to price rather than value and services. That may not bode well for some VARs that made their living off on-premises Exchange and other traditional offerings.

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