Microsofts S+S has a long way to go.


I attended a workshop yesterday at MS which covered off a number of things including MS’s virtualisation pricing, their Service Provider license  Agreements  (SPLA) and their BPOS (MS online services).

Things I was particular struck with in these sessions

  1. The way MS is treating licensing is deliberately stopping users moving from on prem (enterprise licensing) to Service Providers (SP). For instance, if you transfer your licenses to a service provider, that service provider cannot put you on a virtual server farm. They have to put you on a physically isolated server (and of course ) with its own server license.  Implication;  SP’s are inhibited from cannibalising due to the lack of price difference
  2. The way they are licensing there server products is by CPU & virtual machine. Implication;  Even if you don’t use Hyper-V (Zen or VMWare for instance) to do your back end virtualisation, they will get their pound of flesh for server licenses. In my opinion they need to be real careful here otherwise they may drive SP’s to use other OS’s.
  3. MS will bill the end company directly. Not negotiable. Implication;  massive channel conflict is in the offing here. Essentially they are outsourcing the sales function of BPOS and in doing so are setting this sales function in direct competition with their Service Providers (who sell to end customers) and installed product (who sell CD’s). Chaos ….absolute chaos
  4. Their online services start at a minimum of 5 users and its not that cheap. You would have to wonder why that is so? I think i know the answer (see point 5)
  5. One of the terms of use of their online services was that you must upgrade your ‘whatever’ within 12 months of MS upgrading that product. What the? Upgrade? I thought it was SaaS? Implication;  The way MS is doing SaaS (S+S) is just like their service providers, that is multiple virtual instances of their core products. This differs wildly from conventional SaaS wisdom, where you literally have one instance of the code.  It explains many things like how vanilla the offerings are, like why 5 users minimum, like why you need to upgrade the product.  Essentially MS themselves are now their own Uber SPLA, delivering in exactly the same manner. They realise this is costly if you customise the solutions too much or offer it to SOHO customers, hence the draconian rules…

Overall, I wasn’t that impressed. The S+S strategy is being poorly implemented. It clearly demonstrates an incumbent grappling with a legacy revenue problem. It also highlights some true technical naivety .

Office by subscription? What??

News out today that Microsoft is going to offer to sell some versions of its desktop software on a subscription basis. This will be done in typical MS fashion under a cool product name “Equipt”. Confusingly some are calling this part of their S+S play but it seems that the software is locally installed so its not really “SaaS” – just the update feature…

My initial reaction? Cringe… I mean clearly this isn’t SaaS. The cynic in me leapt to the conclusion that this was a lame attempt to combat SaaS with a subscription model.

But then in an IM chat with Ben Kepes I had an epiphany;

What if this is a test case? What if MS is attempting to see if the success of SaaS is in its technical innovation – the software itself and how it’s delivered – or just in its commercial approach – subscription pricing.

Even if MS didn’t plan it that way perhaps we, the public could view it that way? Interesting piece of research in its own right?

Your thoughts as always, are welcome.