Here’s a stat that demands your attention: Microsoft claims 90 percent of Office 365 subscribers are small businesses with 50 or fewer employees. The statistic surfaced today as part of an Office 365 momentum update. But I wonder: If Office 365 is catching on in small businesses, how come MSPs don’t spend much time talking about Microsoft’s cloud suite?
During the recent IT Nation conference in Orlando, Fla., which attracted roughly 1,600 channel partners and channel influencers, there wasn’t much Office 365 chatter. The Microsoft booth at the back of the conference hall had plenty of Office 365 documentation but partners, for the most part, seemed to spend more time with cloud storage companies attending the conference.
Still, a Microsoft blog post today shared some major Office 365 customer milestones and cloud platform enhancements, claiming the suite is now available in more than 60 countries and gaining SMB momentum.
The Microsoft blog post didn’t mention Office 365 channel partners or Office 365 syndicators. But here’s an interesting nugget of info: Roughly 42 percent of MSPs say they offer Office 365 to their customers, according to preliminary data from the fifth-annual MSPmentor 100 survey, which runs through December 23, 2011.
Is Office 365 a big revenue generator for thousands of MSPs? Perhaps not. But based on our data, perhaps far more MSPs are kicking Office 365′s tires without publicly disclosing those efforts…
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I think what MSP’s are doing is offering Office 365 either because they are forced to (client is sold on it) or so they can add the Cloud badge to thier repertoire. It surely is not a profit motive…..other than “It is better to get a little than non at all” is more along the lines of the thought (my opinion). The other thing that I think is an issue for MSP’s is it really is not in step with our MSP billing model……although it is priced per user per month it is more of a reward system than anything. Microsoft bills the client directly and you get a cut (12% at best initially). That cuts the MSP out of the revenue management stream which can cause a problem if it is time to change the client to another faster, more stable or profitable solution if need be. Speaking of stable has anyone had any Office 365 issues with accessibility? What about experience with support? We have not had to engage in support much at all but from what I have heard it is not that great.
Todd,
I think you covered all the major issues/considerations in a single paragraph. Generally speaking, I think Office 365 got off to an unreliable start in July-September 2011 — more outages than Microsoft, customers and partners would have liked. But things seem to have calmed down in recent weeks. Perhaps reliability is getting better.
We’ve covered the pricing, billing, margin and customer control issues quite a bit on each of our websites. Those items continue to trigger some concerns among some MSPs. But I also realize some channel partners are more than happy to have MSFT manage billing while sending a recurring fee to the partner… …
-jp
I believe that Todd hit the nail on the head. With only 12% and not able to mark it up, it’s not viable to resell office365. With other providers (intermedia, etc) it’s possible to mark it up to something reasonable, at least 30%. Yes it’s a harder sell, specially seeing prices likes like $6 a month per user, but there are creative ways to bundle services together to have the markup to make business sense.
Jonathan,
Thanks for weighing in. I guess the key point is MSPs need *some* sort of response to Office 365 — whether they support it or choose a market alternative, you can’t ignore it. Sounds like you found your answer over at Intermedia.
-jp