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3 More (Important) Things Partners Should Know About Office 365

On Monday we pulled together a list of 25 things partners should know about Office 365. We'd actually intended to do 28 things, but couldn't get confirmation from Microsoft on three of them. Now that the general availability is official, we got a confirmation of sorts, so the piece has been updated to 28. If you haven't read through it already, here's the new stuff:

20. Non-LAR Partners Can Make Direct Money on Office Licenses
No one disputes that the Microsoft Office suite is a huge opportunity for partners. But when it comes to making money off the actual license sales, that's always been the territory of large account resellers and distributors. Solution provider partners had to make their money on consulting, integration and other add-on services around that licensing revenue. The Partner of Record fees on Office 365 E3 and E4 subscriptions potentially start bringing some Office licensing revenues directly into solution providers' pockets on a regular basis, as opposed to through short-time promotions. 

We should note that this entry and the next two are extrapolated from previous Microsoft public statements. A Microsoft spokesperson declined to confirm these conclusions by noting that Microsoft doesn't provide that level of detail publicly.

"There are no changes to the partner compensation model. Office 365 creates new growth opportunities for partners to reach more customers, deliver more complete services including Office, and unlock new business," the spokesperson said.

21. The Max Per User Per Seat Revenue Nearly Triples
With BPOS, the maximum revenue a partner could earn from a seat per month was $1.80. That's the $10 customer cost with the 12 percent net new seat fee and the 6 percent renewal fee for the first year. With Office 365, the top SKU, which includes Office Professional Plus and Lync Voice, comes in at $27 per user per month. The corresponding partner fee per user per month would be $4.86.

22. Average Revenues Will Probably Be More of a Wash
For many deals, the $1.80 in fees that partners could get in fees per user per month in the first year (see No. 21 for details) probably won't change much. For customers that do the straight upgrade to the Office 365 E1 SKU, the price is the same. E2, which includes Office Web Apps, costs $16 per user per month, which would bring partners $2.88 a seat each month in the first year. When Microsoft talks about how Office 365 extends the opportunity into small businesses, though, that's a smaller revenue opportunity, and not just for the number of seats per engagement. At just $6 per user per month, it's going to be attractive to customers, but good only for $1.08 per user per month for partners.


Posted by Scott Bekker on June 29, 2011