The SaaS and cloud computing war between Microsoft and Google is triggering some collateral damage among managed services providers (MSPs) and VARs. Two cases in point: Microsoft CEO Steve Ballmer is now visiting customers to personally pitch BPOS (Business Productivity Online Suite) and Exchange Online, sometimes to the detriment of partner MSPs. And Microsoft is quietly offering special pricing on some direct BPOS engagements, MSPmentor has learned. Here are the details and the potential implications for MSPs.

First, some background: BPOS includes Exchange Online, SharePoint Online and other Microsoft-hosted applications. Microsoft has a standard BPOS offering called BPOS-S. But sources say BPOS-S has run into some scalability issues, prompting Ballmer to offer selected customers an alternative version called BPOS-M. The same sources suggest Microsoft is offering customized BPOS deployments at commodity BPOS-S prices.

At least two MSPs say they've been caught in the escalating SaaS battle between Microsoft and Google. The MSPs were involved in large enterprise proposals, but Microsoft allegedly took the deals direct in order to appease CIOs and fend off rival proposals from the Google Apps team. Ballmer personally met the customers to give them peace of mind, the MSPs say.

According to one MSP: "Microsoft is often lucky to scale BPOS-S past 1,000 seats right now. They say they are signing up BPOS-S customers but many of those wins involve customized one-offs. It's called BPOS-M but you won't find a price list or information on the web site about it."

MSPmentor reached out to Microsoft to see if the software giant was offering BPOS-M customizations at BPOS-S prices to address customer pricing and scalability questions. A Microsoft spokeswoman replied:
"We don't have any additional information to share, however Microsoft's BPOS-Standard offering is designed for customers from 5 to 20,000 people who want rapid service adoption and a standardized administrative console and user experience."

Microsoft's Balancing Act

In recent months, Microsoft's channel team has aggressively promoted BPOS to channel partners. That effort is expected to continue as Jon Roskill replaces Allison Watson as Microsoft Channel Chief, effective July 1, 2010. Both Roskill and Watson are scheduled to speak at the Microsoft Worldwide Partner Conference (July 11-15, Washington, D.C.).

Some MSPs say they've had an easy time working with the BPOS team. Other MSPs see clear consulting opportunities involving BPOS. But a few MSPs reiterate their concern about getting trampled amid the Microsoft vs. Google Apps showdown.

The wildcard in all this: IBM, which has started reaching out to Microsoft Exchange partners with some special incentives. We're digging on the details now.

Sign up for MSPmentor’s weekly Enewsletter, Webcasts and Resource Center. And follow us via RSS, Facebook, Identi.ca; and Twitter. Plus, check out more MSP voices at www.MSPtweet.com.