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By | Paul Kunert 22nd June 2011 14:45

Dealers' outrage at Microsoft Office 365 cloud-sales plans

'We lose control of the client'

Microsoft is days away from lifting the covers from Office 365, but top channel brass have yet to assuage reseller anxiety over the client engagement model that they fear paves the way to a massive hike in direct sales.

The launch of the cloud-based biz suite, which cobbles Office Web Apps with hosted Exchange, SharePoint and Lync, is set for 28 June. It was in Beta phase since April but according to company insiders, not all partners got behind it.

Under Office 365, the reseller gets a finder's fee for pushing the customer to Microsoft - only if that business user recommends that supplier - and annuity revenues based on the sale, but the software is hosted by the vendor and it also deals with the billing.

"We lose control of the client," one large Microsoft dealer told The Reg. "We hand them over to Microsoft and then are reliant on the customer naming you as the incumbent supplier. It won't happen overnight but they will take the business direct over time."

One way to circumvent this issue is to roll Office 365 into an Enterprise Agreement so that it is only part of any deal. In fact, Microsoft was keen on getting resellers to sign up to the services, so the enrolment stats at launch will flatter to deceive.

Organisations that want Office Professional Plus including online version of Exchange, SharePoint and Lync will pay $14 per month, with the enterprise pack also including additional features - include instant messaging, video conferencing and online meetings.

However, Microsoft will also heavily target SME and SoHo, firms which by the nature of their size do not qualify for EAs. This segment will be offered a cut-down version, without any of the additional features from $6 per month.

"It is ludicrous to think we can build a cloud business based on the model that Microsoft has established," said an SME reseller partner. "The tracks are being laid but the direction is clear - it is difficult to draw any other conclusion than Microsoft wants to take business direct."

Smaller dealers are taking a pragmatic approach to the situation to re-work the model and limit the damage that a direct sales strategy will inflict on their profit and loss accounts over the fullness of time.

Working out a way forward will be no walk in the park, but plenty of rivals including Google will be willing to help out.

Microsoft was unavailable to comment at the time of going to press. ®

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