Microsoft Office 365, a forthcoming cloud platform, remains in beta. But my phone is ringing off the hook with questions about Office 365, and the potential implications for MSPs, VARs and cloud service providers (CSPs). In response, here's an Office 365 FAQ designed for channel partners. The FAQ will ultimately live on TalkinCloud, MSPmentor's sister site. We'll make updates and provide more perspectives as readers share more views with us.... and as Office 365 nears its official launch.

Q1: What is Office 365?

MSPmentor: Office 365 is the forthcoming successor to Microsoft BPOS (Business Productivity Online Suite). BPOS is a SaaS platform that includes Exchange Online, SharePoint Online and other cloud applications hosted and managed by Microsoft for end-customers.

Q2: When will Office 365 arrive?

MSPmentor: Some MSPmentor sources speculate that Microsoft will launch Office 365 on or around July 1, slightly before the Microsoft Worldwide Partner Conference (July 11-15, Los Angeles). Other sources speculate the Office 365 launch could come much sooner -- perhaps within days or weeks. For its part, Microsoft has indicated that Office 365 will be generally available in 40 countries and regions sometime in 2011.

Q3: How much will Office 365 cost, what will it include and who will it target?

MSPmentor: Technically, that's three questions. But here are the answers: Office 365 seems poised to target everyone from SMB customers up to enterprise customers. In the SMB market, Microsoft states:
“With Office 365 for small businesses, professionals and small companies with fewer than 25 employees can be up and running with Office Web Apps, Exchange Online, SharePoint Online, Lync Online and an external website in just 15 minutes, for $6 or 5.25 euros per user, per month1.”
For enterprise customers Microsoft states:
"Office 365 for enterprises introduces an array of choices for midsize and large businesses as well as government organizations, starting for as little as $2 or 1.75 euros per user, per month1 for basic e-mail. Office 365 for enterprises also includes the option to get Microsoft Office Professional Plus desktop software on a pay-as-you-go basis, for the first time ever. For $24 or 22.75 euros per user, per month1, organizations can get Office Professional Plus along with e-mail, voicemail, enterprise social networking, instant messaging, Web portals, extranets, voiceconferencing and videoconferencing, webconferencing, 24x7 phone support, on-premises licenses, and more."
Q4: What type of commission (up front and recurring) can channel partners earn for selling Office 365?

MSPmentor: I am double-checking Microsoft's partner commission strategy to see if it differs from the current BPOS commission structure.


Q5: Does Microsoft intend to kill its channel and sell Office 365 direct?

MSPmentor: I think Microsoft remains committed to its channel ... though there are going to be some pain points in the months ahead. On the upside, it's safe to expect Microsoft to more clearly communicate its channel commitment in the days and weeks ahead (stay tuned...). Also, the company has a pretty impressive channel team.
All that said, Microsoft concedes that it will compete and cooperate in the cloud. Yes, Microsoft will sell Office 365 direct. But those that resell Office 365 can also become a partner of record, Microsoft says, ensuring that the partner retains end-customer account control.

Q6: Can partners white label Office 365 and manage customer billing?

MSPmentor: No. And that's a big concern for some -- though not all -- channel partners. Generally speaking, most VARs and MSPs I hear from (A) want to brand third-party cloud services as their own and (B) want to maintain the billing relationship with end customers. So far, Microsoft has not introduced either option. That's ironic, especially since rival Google allows Google Apps Authorized Resellers to manage end-customer billing if they so choose.

Microsoft Channel Chief Jon Roskill is listening closely to the cloud billing feedback from partners. My theory: Microsoft wants to successfully deliver Office 365 globally before definitively addressing the billing debate. Also of note: Parallels is partnering with Microsoft to extend cloud customer billing capabilities to really big service providers, like telecom companies. We're watching to see if that Parallels billing capability ever gets extended to smaller VARs and MSPs.

Q7: Are any channel partners embracing Microsoft's cloud strategy and Office 365?

MSPmentor: Yes. So far, Microsoft's top 10 U.S. cloud channel partners apparently have moved more than 1,000 customers to Microsoft's cloud and BPOS services. MSPmentor believes all of those top 10 cloud partners are preparing to offer Office 365 to their customers.

Q8: Should MSPs compete in the hosted Exchange market once Office 365 arrives? If so, how?


MSPmentor: Generally speaking, it seems like email, storage and security are three of the top services that SMBs are shifting to the cloud. Even if you can't make a ton of money from hosted Exchange -- margins could get tight --  I suspect most MSPs need to offer some sort of SaaS email service to increase customer stickyness.

But here's the challenge: It's early in the cloud game for end-customers... they're just getting started with cloud computing. But it's late in the game for hosted Exchange providers. If you don't already host your own service, I think the wisest option for SMB MSPs is to white label or resell an existing third-party service. Options include:
  • Microsoft: Microsoft's own Exchange Online (part of BPOS and the forthcoming Office 365). But again, some partners are avoiding this option because they can't white label the service, nor can they manage customer billing. Also, I believe Exchange Online remains based on Exchange 2007 at the present time.
  • Google: The Google Apps Authorized Reseller Program, in which Google permits partners to manage end-customer billing if they so choose.
  • Cloud Partner Programs: Rackspace Partner Program, Intermedia Hosted Exchange and MessageWire; I believe they all offer white label and billing capabilities for partners.
  • Master MSP Partner Programs: Ingram Micro Seismic and Ingram Micro Cloud offers Intermedia to partners; Virtual Administrator offers MessageWire to partners. The Ingram and Virtual Administrator approaches provide MSPs with a single doorway into multiple SaaS options (email, storage, security, RMM, etc.) for MSPs. Also, I believe Ingram is building a closer SaaS relationship with the Microsoft BPOS and Office 365 teams.
  • Which Ones Did I Miss?: There are dozens of additional options. Post comments if you've had success with a specific SaaS option.
Q9: When did Microsoft originally announce Office 365 and where can I find the press release?

MSPmentor: Microsoft announced Office 365 on October 19, 2010. The Microsoft press release is available here.

Q10: How can VARs and MSPs potentially compete with Office 365?

MSPmentor: In addition to the options mentioned in Question 8 above, check out the TalkinCloud article called: How to Compete With Office 365.

Bonus Question: Does MSPmentor expect Office 365 to be successful?


MSPmentor: First, let's assume Office 365 works as advertised when it arrives.
  • The Customer Perspective: If Office 365 is a quality service then MSPmentor fully expects thousands of enterprises and SMB customers to test the service. Competition with Google Apps and other SaaS offerings will be fierce. But Microsoft will grab its share of the market -- again, assuming Office 365 works as advertised. Our hunch: Office 365 will be a winner with numerous end-customers.
  • The Channel Perspective: This portion of the conversation is less clear. As we pointed out above (see question 7), plenty of channel partners have embraced Microsoft's current BPOS offering. But some channel partners also seem to be rethinking their loyalties as Office 365's arrival approaches. To succeed in the channel, Microsoft must promote case studies that quantify real-world SMB deployments involving partners. And those case studies must communicate how partners profit from Office 365. And, MSPmentor believes, Microsoft must also offer channel partners an end-customer cloud billing capability to address some partner concerns about account control.

Got More Questions?

If you have additional questions about Office 365 and Microsoft's cloud strategy...
  • Post a question in our comments area
  • Email me (joe [at] NineLivesMediaInc [dot] com)
  • Check out TalkinCloud, MSPmentor's sister site. Most of our Microsoft cloud channel coverage surfaces there.
Thanks to those who planted the seeds for this FAQ. We appreciate the questions and the dialog.

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