News

Microsoft's New Commerce Experience Model Aims To Shift Cloud Services Customers to Annual Subscription Models

• By Kurt Mackie
• December 07, 2021

Microsoft is planning to implement its New Commerce Experience (NCE) subscription model with its Cloud Solution Provider (CSP) partners, starting in January, which will hike prices 20 percent for customers opting for monthly subscriptions.

The aim of the NCE program apparently is to lock customers using services from Microsoft's CSP partners into one-year or three-year subscription terms. This under-the-radar change by Microsoft was noticed by veteran Microsoft reporter Mary Jo Foley in this Monday ZDNet article.

Affected Services
The three-year term subscription terms are currently available for Dynamics 365 and will arrive in March 2022 for Microsoft 365, according to Dan Truax, general manager of Microsoft's Global Partner Solutions, in Microsoft's public post about the NCE. The Power Platform (Power Apps, Power BI, Power Automate, etc.) is also subject to the NCE model.

Windows 365, Microsoft's desktop-as-a-service offering, also seems to be getting a three-year subscription term, but Truax contradictorily suggested it's only going to be offered on a monthly basis.

"In the new commerce experience, Windows 365 will be available exclusively through a month-to-month subscription, with no long-term commitment and the ability to adjust seat counts in any month with per-user pricing," Truax stated.

The NCE program takes effect or becomes "generally available" for CSP partners in January 2022, according to a partner Pax8's FAQ document.

Partner "margin" (profit) will remain the same under NCE, the Pax8 FAQ explained. Prices aren't changing, except for the previously announced Office 365 and Microsoft 365 price hikes planned for March 1, 2022.

NCE Launched in 2019
The NCE was first launched in 2019 for Azure services, and became part of Microsoft's CSP program in 2020, according to a post by Crayon (machine-translated from Finnish into English), a Microsoft Gold partner. The Crayon post explained that Microsoft is planning to implement a third phase of the program, which will bring its user-specific products -- namely Dynamics 365, Microsoft 365 and Windows 365 -- under the NCE model.

CSP partners will have a period in which to transition customers to the NCE model, lasting from Jan. 2022 through the end of June 2022, Crayon indicated. This transition period includes 5% promotional pricing for annual terms and "monthly term offers priced the same as annual term," according to Truax.

Truax indicated that "the ability to place new orders on the existing platform will end on March 10, 2022,"which suggests that customers will be compelled to buy services under the NCE model after that March 10 date.

By July 2023, Microsoft expects its CSP partners to have "transitioned all commercial annual term subscriptions in the existing CSP business to the new commerce experience," Truax indicated.

NCE Changes
In general under the NCE, the invoicing for services will change from daily invoicing to monthly invoicing. The price offered by the CSP will be protected only for 12-month subscriptions or three-year subscriptions. Subscribers opting for monthly subscriptions will face pricing that's 20 percent higher than the annual pricing.

Customers will be able to make changes to their orders only during the first 72 hours, or on the renewal date of the monthly, yearly or three-year subscription plans.

A Change.org petition that was started by Axiom Tech requests that Microsoft revoke the 20 percent price hike on customers opting for monthly subscription terms, as noted by Foley. The monthly terms allow some customers to better plan according to their needs, the petition emphasized.