News

Microsoft Bringing Subscription Options to Windows, Surface

• By Scott Bekker
• July 13, 2016

• Get more news from WPC 2016 here.

TORONTO -- The pay-as-you-go revolution is coming to Microsoft's crown jewels -- the Windows client operating system and its golden child, the Surface device line.

Partners cheered the announcement Tuesday at the Microsoft Worldwide Partner Conference (WPC) in Toronto of the specific programs, called Windows 10 Enterprise E3 in CSP (Cloud Service Provider) and Surface as a Service.

Even as Microsoft has shifted its focus to cloud products, such as Office 365 and Azure, the Windows OS remains a huge revenue-driver and is the product most associated with the Microsoft brand. Surface devices like the Surface Pro and Surface Book, meanwhile, in the last year have gone from a business generating $1 billion a year to $1 billion a quarter.

Yusuf Mehdi, corporate vice president in the Microsoft Windows and Devices Group, announced the programs onstage at WPC and in a blog post.

The Windows 10 Enterprise E3 in CSP starts this fall and will cost $7 a seat per month. At list price, that equates to $84 a year for Windows.

"[It's] ideal for businesses who do not have dedicated IT resources or limited IT staff, and want their licensing and IT needs managed by a trusted and experienced partner," Mehdi said. "Partners can now offer their business customers the 'full IT stack' from Microsoft, including Windows 10, Office 365, Dynamics Azure and CRM as a per user, per month offering through a single channel, which businesses can scale up or down as their needs change."

Mehdi also said businesses will be able to use the offering to move from Windows 10 Pro to Windows 10 Enterprise E3 without a reboot.

The Surface as a Service offering will effectively allow customers to lease the hardware at a monthly price, creating a huge opportunity to grow market share for the devices, which Microsoft originally positioned as reference machines to spur OEMs to create new categories of Windows experiences.

Mehdi said Cloud Solution Providers who are also Surface Authorized Distributors can offer Surface devices to other resellers and to customers. The distributors and their resellers can use the devices to build managed services that go from the device all the way to the back-end cloud for a complete IT stack at a monthly price. The program launched with the European CSP ALSO, and Microsoft is working to expand it globally.

"I'm excited to see Windows come into the subscription program along with Surface devices. It makes the purchasing motions simple and gets the customer used to treating IT as a utility. It matches the solutions offering all across the product set," said Matt Scherocman, president of Interlink Cloud Advisors in Cincinnati.

Another partner, Ric Opal, vice president and general manager of Peters & Associates in the Chicago area, called the programs a smart move in the long term.

"Strategically, it makes sense for partners if partners can take their IP and bundle it in such a way that makes sense for customers. There's a wide range of offerings in CSP now that can be bundled," Opal said.

Todd Schwartz, co-founder and co-CEO of SkyKick, a Seattle-based vendor of Office 365 migration and other cloud tools, predicted the $7/month plan was going to be "huge" for partners and customers. "Having it be able to be combined and bundled with CSP, partners can come in with some ridiculous offerings," he said.