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Microsoft is aggressively pursuing business relationships with cable companies as it strives to strengthen its software as a service (SaaS) strategy, MSPmentor has learned. If it secures partnerships with cable companies, Microsoft could wind up competing with some managed service providers that offer hosted Exchange Server systems to small businesses.
Microsoft announced its updated SaaS strategy in March. Since that time, Microsoft has reached out to at least three major cable companies in an attempt to convert them to hosted versions of of Exchange Server email, among other applications. “They’re offering some very aggressive pricing and consulting services to get us to roll out hosted email to our customers,” said one senior IT executive from a major US cable company.
The executive, who requested anonymity, says his company is leaning toward testing Microsoft’s entire suite of hosted applications as a potential offering for consumers and small business owners.
Bracing for Coopetition
Microsoft’s effort to transform cable companies into SaaS providers underscores how MSPs will need to cooperate and compete with the software giant.
On the one hand, Microsoft has been among the most partner- and channel-centric software companies for more than two decades.
But on the other hand, old software development and distribution models are crumbling. As Microsoft strives to compete against open source and SaaS leaders like Google and Salesforce.com, the company will need to give customers the option to buy direct or through partners.
Microsoft’s growing portfolio of SaaS applications has attracted a growing network of partners. Ingram Micro earlier this month announced plans to offer hosted versions of Exchange, Microsoft Dynamics and Microsoft SharePoint to its Seismic partners.
Meanwhile, MSPs are buying up some of Microsoft’s partners, in a bid to corner the market for emerging SaaS applications. Check the MSPmentor Merger and Acquisition Tracker for ongoing deals.
Posted In: Software as a Service
Tags: Cable companies | Managed Service Provider | Managed Services | Microsoft | MSP | Software as a Service
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SAAS is evolving more rapidly these days. SaaS is not only a different delivery mechanism but a different business model and different technology as well, selling through channels.
Kevin,
http://www.virtela.com
If SaaS ISV’s think of their applications as the services that they are, telecommunications companies provide the “pipes” that their services are delivered through. It’s a very good strategy in my opinion, one which I have written about in the past.
Coghead inked a deal with BT last year, and Jam Cracker partnered with XO in a similar fashion:
http://www.metricz.com/2007/09/coghead-and-bt-partnership/
Telcos have established relationships with customers and potential customers of ISVs - both through the services they are already delivering to them (internet access, telephone service, etc.), as well as the services that they are delivering to ISV’s customers’ customers (whether at the business or consumer level).
They also have established relationships with many VARs and IT Service Providers, so it can be an excellent way to build a strong channel play.
Jesse: Excellent points but consider this: Telecommunications companies are tired of being pipes. Some want to offer the pipes … and the applications that flow through them. A prime example: Telecom providers are introducing VoiP, unified communications, and other apps. The line between telecom provider and ISV is blurring in some ways.
Agreed, Joe. That was the part of the point I was trying to make.
They have been the pipes for far to long, and partnering with ISV’s is a win for them as well. As you said, many are introducing apps, but I’m not aware of any that are actually developing the apps themselves (with the exception of some webmail apps maybe). Telcos are partnering with ISVs, and they have a lot of negotiating power in what the bring to the table.
Did you see this Joe? BT and SugarCRM just announced a partnership this week as well:
http://www.sugarcrm.com/crm/about/press-releases/20080422-bt.html
BT will be offering SugarCRM to its 1.2 million business customers in the UK.
Jesse: Sorry for the belated reply. I’ve been wrong about a few software vendors in my career. But in this case, I’m dead-on: SugarCRM will be one of the most successful open source application providers, and will either launch a successful IPO in 2009 or get acquired for a hefty price premium. Mark my words.
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