Shifting From Hosted Exchange to Unified Communications: Are VARs Ready?

At the Intermedia Partner Summit, the hosted Exchange provider told dozens of MSPs and VARs that they can potentially generate more profits from hosted unified communications. Intermedia’s pitch sounds accurate. But a few attendees raised questions about  getting into the hosted Unified Communications market. Here’s why.

First, some background. Intermedia is one of the largest hosted Exchange providers, and the company’s partner program has attracted thousands of VARs and MSPs. Amid aggressive SaaS email pricing from Microsoft BPOS (Business Productivity Online Suite) and Google Apps, Intermedia has pushed beyond hosted Exchange to introduce hosted Unified Communications.

Intermedia is carefully balancing its strategy — assuring partners that the company remains committed to hosted Exchange amid continued market growth. Reinforcing that point, most of the sessions at the conference focused on hosted Exchange rather than hosted Unified Communications.

Still, hosted Unified Communications is part of the conversation here. Intermedia is partnering up with Unison Technologies on the hosted Unified Communications effort. Hosted Unison:

“integrates email, telephony, chat, presence, contacts, calendar and more into a single service. The service also supports mobile synchronization of email, contacts and calendar. Intermedia manages hosted Unison service delivery from start to finish, including – through an affiliate telecommunications company — the provision of phone numbers and voice service.  The service is backed by Intermedia’s 24×7 support, migration tools and a multi-million dollar infrastructure that includes four datacenters.”

Money Matters

Although partner pricing has yet to be announced, it sounds like hosted Unified Communications will generate about $50 per seat in revenue, compared to about $12 per seat for Hosted Exchange. Why would customers pay more for hosted Unified Communications? Look at retail pricing for the potential answer:

• At roughly $12 per seat (retail), hosted Exchange supports email, contacts, calendars and instant messaging.
• At roughly $50 per seat (retail), hosted Unified Communications supports email, contacts, calendars, instant messaging, presence and unlimited phone calls in North America. (The VAR Guy doesn’t know how international phone pricing works. But the system certainly supports international calling.)
• (Data points from Rurik Bradbury, chief marketing officer, Unison)

Based on the clues above, when Intermedia and Unison Technologies announce the partner program for hosted Unified Communications, you can bet the margins will be far higher than the margins on hosted Exchange. Still, Intermedia reinforced to partners that no specific partner pricing program has been announced at this time.

Potential Concerns

Plenty of Intermedia Partner Summit attendees sound interested in hosted Unified Communications. But some partners expressed the following concerns:

• If email potentially fails, customers are disappointed. But when phone service fails, customers truly become irate. So pitching hosted Unified Communications may involve overcoming customer fears, uncertainty and doubt. Intermedia executives assured attendees that the company’s commitment to system reliability (well-known in the Exchange market) will be reflected in the hosted Unified Communications market.
• If the customer’s Internet connection goes down, customers may perceive that the hosted Unified Communications system is the problem. In that scenario, customers who already leverage hosted PBXes and hosted Exchange may be more inclined to make the move to hosted Unified Communications — because they’re already true believers in the SaaS business model.

For the most part, Intermedia Partner Summit attendees seem focused mainly on hosted Exchange. But a healthy portion of the crowd is taking a close look at hosted Unified Communications.