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Aussie Hosting Deal Rankles Resellers

First things first before we travel halfway around the globe: We'd like to wish a very happy Veterans Day to all and offer our sincere gratitude to all those who have served in the U.S. Armed Forces. Thank you for your service.

Now, let's travel to perhaps the most cliché-ridden place on earth: Australia! Does anybody else remember the "Simpsons" episode in which Bart goes to Australia? (We can't find it on YouTube...sorry.) There's a funny montage in it about Americans' brief fascination with Australia in the 1980s and all the hackneyed clichés and stereotypical characters it gave birth to.

We're required by international treaty -- look it up -- to mention Crocodile Dundee at least once (check, plus we linked a photo) and use at least one stereotypical Australian phrase (let's go with, "G'day, mate!") when talking about Australia. So, with that out of the way, we can get on to the point of this entry. (And, by the way, Aussie friends -- we're not making fun of you; we're actually making fun of American popular culture from 20-plus years ago. And, as a native Texan who spent five years living in Europe, your editor is well-accustomed to having to dispel -- or sometimes reinforce -- stereotypes and answer some odd questions about his homeland.)

Anyway, the reason we're Down Under (almost forgot to work that one in) is that there's a pretty interesting channel story coming out of Australia. Microsoft recently announced a deal with longtime Australian partner Telstra to provide hosted e-mail applications on Telstra's SaaS platform. Nothing earth-shattering, right? Well, no, it's not.

But it's got some Aussie partners up in arms. They're worried that the deal will kill off opportunities for other resellers in the channel, and we kind of see where they're coming from. Check out a quote -- actually attributed to somebody who wasn't afraid to go on the record -- from a reseller in the story linked above:

"Why would you employ an IT technician to fix your computer problems if it's all online to Telstra or Microsoft," Total Network Support director Oliver Lindsaar said. "It will have a very big impact on lower-end employment in the industry. Microsoft and Telstra say there are all these other opportunities. Yes there are, but you either have to be very innovative with your products or very large to be able to supply the sorts of service large companies want."

It's the last part of that quote that's the kicker -- specifically the part about being "very innovative." Partners, and not just partners in Australia, are worried about Microsoft's SaaS plans, which seem to include the channel (and hosting partners in particular) almost as an afterthought. And now some Aussie service providers are apparently worried that Microsoft has chosen to go forth with one particular partner in their market, further limiting their opportunities in a model that might not have seemed that potentially lucrative to begin with.

And they should worry. Then they should work on that "very innovative" bit that the partner above mentioned. Because the reality of SaaS and Microsoft's SaaS plans is that channel companies are going to have to rethink and rework their business models if they want to be a part of this new computing paradigm. If SaaS is going to take hold, it's going to have to cause a massive shift in the way companies handle IT investments -- that's really the point of it. And old, familiar business models rarely hold up when massive market shifts take place.

We're not here to comment on whether Microsoft's Telstra deal is fair or not -- because that's not the point. The point is that it's done and that the reality of SaaS is slapping some partners in the face. They need to determine now how they're going to deal with it. Fortunately, they have some time -- SaaS might never live up to its much-ballyhooed potential (something to consider), and it certainly won't completely replace more traditional models any time soon. But it's also something the channel as a whole can't ignore any longer.

What are your plans for SaaS? What's your take on deals like the one Microsoft made with Telstra? Sound off at lpender@rcpmag.com.

Posted by Lee Pender on November 11, 2008 at 11:54 AM