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Microsoft throws select partners a bone with Office 365

About 20 syndication partners will be able to own the customer relationship for Office 365, the hosted productivity services that Microsoft launched today.

A very select group of Microsoft partners will be able to bill customers for Office 365, which went online today.

The privilege extends to Office 365 syndication partners -- 20 or so telcos, hosters and Software-as-a-Service partners, but no rank-and-file VARs. That means the vast majority of Microsoft’s partners will still not be able to own the customer relationship in any transaction. And Microsoft will also sell these hosted productivity services direct.

Still, the news marks a concession by the software giant. When Microsoft launched Office 365’s predecessor, Business Productivity Online Suite (BPOS), Microsoft insisted on owning the customer and the billing relationship for all deals. That scenario is anathema to VARs, who consider themselves the local feet on the street supporting end user customers.

BPOS partners could, however, make 12% margin in the first year of any BPOS service sold and 6% for each additional year, as long as they remained the customer’s partner of choice. A similar model will hold true for Office 365 as well, but a spokeswoman could not confirm the exact margins. Microsoft will undoubtedly talk more about these specifics at its Worldwide Partner Conference in two weeks.

Hosting partner AppRiver is aboard with Office 365 because Microsoft created an offering that matched customer demand and provided channel opportunity, said Scott Paul, strategic accounts manager for the Gulf Breeze, Fla., company. There are several professional services opportunities, as well as site-development and site-migration services, around Office 365 that could attract VARs, he said.

“There’s also a big training aspect around the IM piece,” he added. ”There’s an audio and video conferencing piece, which presents opportunities to add value.”

AppRiver did not do any business around BPOS but is a hosted Exchange partner.

Syndication partners can also customize or brand the Office 365 control panel -- at least to some extent -- for customers. The inability to co-brand BPOS was another bone of contention VARs had with Microsoft.

Asked why customers might want to buy from a partner like AppRiver instead of direct from Microsoft, Paul said many customers want a faster, more personalized service. 

"It comes down to who answers the phone and how quickly they answer it. These are the same issues we deal with on hosted Exchange. We sell a service and support experience that happens to come with a mailbox." 

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