Channel partners offering Microsoft (MSFT) Office 365 got a few unpleasant surprises recently. First, last week Microsoft revealed that on January 25 it will cut commissions to service providers who sell this service and others under the Microsoft Advisor Enterprise Agreement Deploy volume licensing program. The commission cuts will affect not just Office 365, but also Exchange Online, as well as other Microsoft cloud services. Second, Microsoft announced a giant deal with GoDaddy which lets the web hosting company offer Office 365 to small businesses at a discounted price.  Here are the details of both stories.

First, the commission cuts. These will range from 15 percent to 50 percent, Talkin’ Cloud reports. The decision has raised the ire of many Microsoft partners, some of whom have even threatened to jump to selling competitor Google Apps.

And they come after a rocky start for Office 365 with the channel. Microsoft first introduced the service as a direct-only play, only granting direct billing capabilities to a handful of huge service providers and telecom providers. In response to the backlash from the channel and several influential MSPs, Microsoft introduced Office 365 Open, putting MSPs back in the game.

Now, as sister site Talkin’ Cloud puts it, “All that good karma Microsoft earned in 2012 when it ceded to partners' wishes and granted them the ability to directly bill their end customers may well slip away later this month when partners find their cloud commissions cut.” Check out the full article here.

The GoDaddy Deal

Adding insult to injury, Microsoft and web hosting company GoDaddy this week announced an exclusive partnership to sell Office 365 to small businesses.  Check out coverage over at Talkin’ Cloud here.

The deal provides GoDaddy small business customers with better pricing on Office 365 offerings – made up of Microsoft’s productivity suite online including Microsoft Word, Excel, Powerpoint, and Lync, and gives Microsoft access to GoDaddy’s existing customer base of small businesses. The service also includes 24/7 customer service for small business customers.

“Combining our small-business expertise together with Microsoft’s productivity offerings opens new doors for small businesses to easily get the tools they need to get more done in their day,” said Steven Aldrich, senior vice president of Business Applications, GoDaddy, in a prepared statement. “We’ve created a simple way to attach Office 365 to a domain name, helping small-business owners look professional and work anywhere, making the business of running their business easier.”

Does it Matter?

So here are my questions for our MSP audience: Will these  Microsoft Office 365 developments affect your MSP business?  Are you operating in the one-time commission structure with Office 365, and if so, how much does it contribute as a percentage to annual revenues?  And if not, what services do you provide around your customer’s Office 365 implementation?

And separately, does the GoDaddy deal matter to you? Will it cut into your business, or is t complementary. Let us know your thoughts in the comments below.