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In-Depth

Windows Intune Hits a Flat Pitch

Editor's Update: The orginal version of this article incorrectly reported Windows Intune's capabilities. Windows Intune will not include software deployment or operating system deployment capabilities.

Tami Reller walked up to a touchscreen monitor on the Microsoft Worldwide Partner Conference (WPC) stage moments after she'd introduced a brand-new product called Windows Intune.

Reller, the corporate vice president of marketing and CFO of the Windows and Windows Live Division at Microsoft, led the audience through three quick scenarios involving a virus-infected PC, patch management and remote assistance for a mobile worker. A fourth demo hinted, for the first time, at why partners might be interested. It showed that a feature of the beta 2 release of Windows Intune allowed a partner to call up a management view of all of the customers of that partner.

"It's really a new revenue opportunity for you, but equally as important, it's a new way for you to add value to customers, and, typically, for customers who really haven't had the benefit of structured PC management," Reller said in her WPC keynote.

The audience's muted response in Washington, D.C.'s Verizon Center was perfectly understandable to Scott Gode, vice president of product management and marketing for Azaleos Corp.

"Knowing what Intune was, I was able to follow along," says Gode. "For a lot of the partners who may not have been introduced to [Windows Intune], they were probably thinking, 'I have no idea what I just saw. Is it an extension to Zune?'"

Reller and CEO Steve Ballmer never connected the dots that Windows Intune is a potential solution for managed services providers (MSPs). Beneath the surface, Windows Intune is a fairly promising solution for MSPs to use to remotely manage Windows desktops. The product stands to leverage Microsoft's unparalleled knowledge of Windows internals to enable PC management and security. The latest of Microsoft's growing portfolio of cloud solutions, Windows Intune also could offer robust remote management capabilities that allow MSPs to cover customers all over the globe. But Microsoft's fumbled introduction on the WPC stage missed the best opportunity the company had to make a strong first impression with partners. Can Microsoft back its way into a market already crowded with MSP tools for remote management and monitoring (RMM) of both desktop and server systems?

Windows Intune Basics
At its core, Windows Intune is a cloud-based version of the desktop management capabilities customers could previously get by deploying Microsoft System Center technologies. Rather than hosting a System Center server on-premises and managing desktops from the server, administrators using Windows Intune load a client onto the desktops. Administrators can access via a browser the management software and tools in the cloud and manage and secure those desktops through the cloud. In addition to the product features, the monthly subscription will include upgrade rights to Windows 7 Enterprise for every covered desktop and an option to buy the otherwise hard-to-get Microsoft Desktop Optimization Pack (MDOP).

When the first limited beta of Windows Intune arrived in April, Microsoft described it almost exclusively as a midmarket IT-focused offering, with a slightly lower-end core audience than the System Center suite of products reaches. Core capabilities of Windows Intune include the ability to centrally manage the deployment of updates and service packs to PCs, to manage protection of PCs through the Microsoft Malware Protection Engine, to receive alerts that help administrators proactively monitor PCs, provide remote assistance, track hardware and software inventory, and set security policies.


[Click on image for larger view.]
ClearPointe, a Gold Certified Partner and managed services provider, already hosts Microsoft System Center for clients from its Little Rock, Ark., datacenter. The company is testing the Windows Intune beta for eventual use in its operations.

For users familiar with Microsoft's other product families, Windows Intune combines a Web-based management console with the desktop malware protection and reporting of the Microsoft Forefront Protection Suite and the update management and hardware/software/licensing inventory capabilities of Microsoft System Center Configuration Manager 2007 or Microsoft System Center Essentials.

Making an MSP Play
Among the 1,000 participants in the first beta were some MSPs who provided feedback about what the tool needed if it was going to make the jump from being focused on the needs of midmarket IT departments to functioning as an MSP management tool. The result is the Multi-Account Console, which allows an MSP to see all their customers from one screen.

 "I give [Windows Intune] straight A's across the board. Intune allows us to stay within the Microsoft framework."

Bob Longo, Vice President, Business Development, ClearPointe

"We had many partners in the first beta who told us they wanted to use Windows Intune to manage several of their customers all at the same time," wrote Alex Heaton, group product manager for Windows Intune at Microsoft, in a blog posting July 12, coinciding with the beta 2 launch. "From the account selection screen, partners will have an aggregate view of the environments they manage, so they can easily monitor the status and health of client PCs, including Agent Health, Alerts, Anti-Malware and Updates. Partners can change the filter to view by health status, so customers in need of urgent assistance will rise to the top of the list. This addition makes the experience simple for partners to scale and will hopefully save them time and, ultimately, money."

In an interview at the WPC, Heaton disagreed when asked if the addition of the Multi-Account Console at the beta 2 stage indicated that the MSP audience was an afterthought in a tool primarily intended for midmarket IT companies. "We always knew that partners would be interested in [Windows Intune]. We didn't know what the priority of it would be," Heaton said.

The second beta is open to 10,000 participants. Plans call for Windows Intune to be generally available by early 2011.

Pricing and Partner Margins
When the product enters general availability, pricing will be $11 per user per month, which includes the Windows 7 Enterprise upgrade rights for as long as the subscription lasts. Windows Intune also manages professional versions of Windows XP and Windows Vista.

Customers interested in MDOP can pay an extra $1 per user per month for access to that package, which includes the Microsoft Diagnostics and Recovery Toolset, Advanced Group Policy Management, Application Virtualization, Enterprise Desktop Virtualization and System Center Desktop Error Monitoring.

In a partner-of-record arrangement similar to the structure of the Microsoft Business Productivity Online Suite (BPOS) deals, Microsoft will bill customers directly and pay the partner 12 percent of the first year's subscription fees for each new customer and 6 percent of subscription fees for subsequent years. Because of the way Microsoft accounts for the payments, they amount to 18 percent in the first year and 6 percent thereafter.

The Partner Opportunity
In a white paper called "VAR Partner Opportunity Overview," Microsoft suggested several ways the new product may contribute to partner revenue increases in addition to partner-of-record fees, such as:

  • Making managed services more scalable by relying on the Microsoft cloud infrastructure
  • Increasing an MSP's geographic reach without requiring the firm to install management servers on new customers' premises
  • Providing an opportunity for partners to have conversations with customers about Windows 7 migration-related projects
  • Giving partners better insights into customers' project needs through software, hardware and license inventories

In the white paper, Microsoft created a graphic that put together a scenario for a partner to collect about $100,000 in revenues over two years from a 100-seat deal involving Windows Intune. The deal included $2,376 in partner-of-record fees the first year and $792 in fees the second year. The biggest component of the revenues was $28,800 in annual fees for ongoing desktop support, which indicates that Microsoft assumes MSPs will be able to sell Windows Intune as merely enabling remote desktop work, and that those partners will still be able to sell the value of the expertise of using those tools as something worth more than twice as much as the raw cost of having the tools.

Revenue Opportunity Year 1 Year 2
Partner-of-record fees $2,376 $792
Windows 7 Enterprise migration and deployment $13,500 project revenue NA
Ongoing desktop support $28,800 annual revenue $28,800 annual revenue
Services and consulting $19,800 project revenue NA
Total ~ $64,000 X~ $30,000XX

The Windows Intune Partner Opportunity
In a white paper for partners called "VAR Partner Opportunity Overview," Microsoft lays out its math for how a partner could realize about $100,000 in revenues over two years by landing a 100-seat Windows Intune deal.

The Microsoft model also assumes the partner can drum up $13,500 in project revenue around a Windows 7 Enterprise migration and deployment from the upgrade rights of Windows Intune. It further assumes $19,800 in project revenue for services and consulting around such technologies as BitLocker, DirectAccess and BranchCache configuration projects, endpoint security assessments and Microsoft Forefront migration projects for customer desktop environments.

Partner Reactions
Microsoft is naturally trying to make a market for Windows Intune as a partner tool, so the lucrative projections must be taken with a grain of salt.

And it's difficult to tell how many partners are participating at this early stage. Microsoft executives boast that the beta 1 program with its 1,000-participant limit was oversubscribed within 24 hours of its April launch, but that's a mix of customers and partners. Some of the partners quoted in Microsoft's initial marketing materials sound as though they're treating Windows Intune as an internal systems management tool for improving their own operations rather than as a product they would represent to customers.

One Gold Certified Partner that clearly understands the product and the MSP opportunity it addresses is Little Rock, Ark.-based ClearPointe. Bob Longo, vice president of business development at ClearPointe, says "I give it straight A's across the board. I even installed it myself -- the biggest step was uninstalling my old antivirus software."

ClearPointe has made a business of hosting System Center Operations Manager for clients and Longo expects Windows Intune to fit into the company's business, which involves showing customers the richer monitoring allowed by cleaving to the Microsoft stack.

"Intune allows us to stay within the Microsoft framework. We looked at other products heavily," he says. "Every third-party product is another file folder. The more that we can keep it within the Microsoft framework, the lower the cost."

For Longo, the geographic expansion opportunity in the Microsoft Windows Intune pitch is reality. "We foresee large adoption. We've got international clients that we can roll this out to," he says.

While the tool makes a lot of sense for ClearPointe with its longstanding Microsoft-first approach to customers on systems management, Longo is not sure how popular the tool will be among other MSPs.

One challenge will be the same conflict that Microsoft faces with partners over BPOS -- having a direct billing relationship with customers and offering margins that are not only set but will reduce the MSPs ability to control overall prices and margins by bundling services together into an overall monthly service fee.

"The MSPs want control of the margins, they want control of the client," Longo says. "But I've got to tell you, you're sticking your head in the sand by ignoring services like this and ignoring BPOS. It's not so much about managing the server anymore; it's more about managing the applications, the user experience. I'm going to give you the SLA no matter where the data comes from."

If Microsoft does succeed in making Windows Intune attractive to MSPs, it will take a lot of effort and time, Longo predicts.

"There are so many MSPs that have already built their practice around these other tools that have a mature MSP offering. The reporting, the integration into their billing systems, the ticketing systems, all of the integration -- that's going to be difficult to undo," Longo says.

Stuart Crawford, a Calgary-based consultant with Ulistic Inc. who works with MSPs on marketing and business strategies, agrees that Microsoft has an uphill battle to get MSPs to switch, no matter how good the product is. Established players include Kaseya International Ltd., Level Platforms Inc., N-able Technologies Inc. and Zenith Infotech Ltd. "Really, do we need another remote monitoring and management tool in the MSP business? There may be room for another tool," Crawford says. "I believe the MSPs who are running successful businesses have their product offerings set in stone. Unless Intune knocks their socks off, I can't see [them gravitating to Windows Intune]."

Microsoft does have a chance with startups, however, and Crawford encourages any MSP who is currently server-focused to get involved with desktop management tools, like Windows Intune.

 "Desktop management is where you make your money. Working one-on-one with people is what your MSP must focus on."

Stuart R. Crawford, Consultant, Ulistic Inc.

"Desktop management is where you make your money. Working one-on-one with people is what your MSP must focus on. Servers are nice, but usually there isn't a warm body directly attached to it," Crawford says.

Azaleos' Gode sees Windows Intune as potentially reaching a lower end of MSP customers than his company services, and he does think the product could find some MSP takers.

"I think there's definitely room at the low end. As you get into more serious midmarket and certainly the enterprise, I'm not sure there's room. But the wild card is if Microsoft can get 70 percent to 80 percent of the features and offer it at a price point that is extremely aggressive to get share, we're going to find enterprise customers who say it's good enough or they'll use it as a serious bargaining tool.

"In the short term, our interest in Windows Intune is more of the watch-and-wait-and-see type. Our business is all about remote managed services for enterprise-size companies. We focus on Exchange, SharePoint and Office Communications Server, managing those products for companies either on-premises or in the cloud," Gode says. "I think where they're trying to go with it is similar to what they've already done with BPOS - start with simpler scenarios and as they understand those scenarios, push it upstream. That could threaten our business model a little bit more."

Microsoft must be careful in its positioning if it hopes to attract a lot of MSP interest, says Charles Weaver, president of the Chico, Calif.-based MSPAlliance, a professional association and accrediting body for the managed services industry. "If this is [seen as] a bypass-the-channel, go-direct to the end user [initiative], intentional or not, MSPs would react by saying, 'Why would I push this product?'"

The sales job for Microsoft is complicated by the beta 1 focus and continuing emphasis on midmarket IT customers, the direct billing of MSP customers and the ability of customers to buy the Windows Intune service directly from Microsoft, according to Weaver.

Early indications are that Microsoft hasn't been that deft in its MSP positioning for Windows Intune, or at least hasn't taken the MSP market seriously enough as an outlet for the tool to prioritize its MSP messaging. There is a precedent for Microsoft doing a head fake toward the MSP market then pulling back -- System Center Remote Operations Manager 2007.

A partner-focused solution, Remote Operations Manager required partners to install a System Center Essentials 2007 server at each customer site. That server reported network and system vitals to a System Center Remote Operations Manager 2007 server that an MSP could operate in a network operations center. Partners had to sign a Microsoft Service Provider License Agreement, which was designed to allow services providers to pay a monthly usage-based cost for what they made available to customers the previous month. As the economy soured, the product disappeared.

ClearPointe's Longo says Microsoft is already doing something right with Windows Intune that it didn't do with Remote Operations Manager. "With Remote Operations Manager, they needed a way for the client to go out and select a partner when they're installing the server. Some of that's there now with Windows Intune, customers have a way to select the partner off the Web site."

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