Microsoft Targeting July 1 for Office 365 Cloud Launch?

Multiple sources say Microsoft has circled July 1 as a potential launch date for Office 365, the forthcoming successor to Business Productivity Online Suite (BPOS). The potential target date would allow Microsoft to heavily promote Office 365 at the annual Microsoft Worldwide Partner Conference (WPC, July 10-15, Los Angeles). No doubt, Microsoft is betting its cloud strategy on Office 365 and its sister cloud site, Windows Azure. But will MSPs warm up to Office 365 when it arrives?

Generally speaking, I think Office 365 is going to be a huge hit with enterprises and small business customers that want cloud options (Exchange Online, SharePoint Online, Lync Online, etc.) mixed with traditional on-premise offerings. But Office 365’s aggressive pricing — as little as $6 per user per month in a small business — has triggered concern among some MSPs who worry recurring cloud margins could erode quickly. Also, some partners express concern that they can’t control end-customer billing for Office 365. Ironically, major cloud rivals like Google Apps and Rackspace allow partners to manage customer billing if they so choose. Microsoft Channel Chief Jon Roskill has stated that he’s listening closely to partner feedback on the cloud billing matter. My best guess: Microsoft will address the cloud billing debate after Office 365 launches.

Preemptive Moves

Meanwhile, Microsoft rivals are formulating strategies to compete with Office 365. Intermedia, a hosted Exchange provider, cut prices in February though the company has not engaged in a SaaS price war. Generally speaking, it sounds like Intermedia, with an assist from MSPs, wraps additional services around hosted Exchange to generate per-user prices of at least $10 per user per month. And during an Intermedia Partner Summit earlier this week in New York, the SaaS specialist hosted a session that helped MSPs and VARs to understand how to compete with BPOS, Office 365, Google Apps and other major SaaS providers. Intermedia also unveiled encryption and online backup relationships at the summit, and continued to promote hosted PBX services as a natural next step beyond hosted Exchange.

Back at Microsoft, the current BPOS release seems to be gaining momentum. In recent months Microsoft has announced numerous Fortune 500 companies and higher education customers that are embracing BPOS. Still, sources say some of those wins involve a dedicated BPOS release rather than the commercial, shared BPOS release. Also, I haven’t heard much about smaller VARs and MSPs promoting BPOS. For Office 365 to really catch on in small business, I think Microsoft has to do a much better job promoting SMB channel partners that profit from Microsoft’s cloud. And of course I think Microsoft will need to give MSPs and VARs the power to manage end-customer cloud billing. One prime reason: During the Intermedia Partner Summit in New York earlier this week, numerous MSPs and VARs said they only offer third-party cloud applications if the cloud service has white label billing and branding capabilities.

Microsoft has previously stated that Office 365 will arrive sometime in 2011. I asked Microsoft for an update and will let you know what I hear.

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