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Microsoft Cuts Cloud Prices

OK, so the news here is that Microsoft has decided to make its discount on the Business Productivity Online Suite, or BPOS (catchy), permanent. Henceforth, the price of BPOS will be $10 per user per month rather than $15 per user per month.

Hey, if it works, it works, although partners might not be thrilled by this cloud pricing strategy if it ultimately causes their referral fees to shrink. The main point here, though, is that the timing of the permanent price cut is likely not incidental.

As we've been telling you for a while now, Microsoft recently lost a bid to provide e-mail service for the city of Los Angeles. Google and its pure-cloud play beat Microsoft, which spent perhaps too much time (at least publicly) railing against the security and reliability of Google's cloud-based applications -- and, we submit, doing too much bashing of the whole idea of the cloud in general.

Well, today, we read this from a Seattle PI article:

"The Business Productivity Online Suite was one of the Microsoft options that the Los Angeles city government considered while searching for a new e-mail and collaboration system..."

Oh, really? Well, that's even more interesting. So Microsoft comes in, bashes Google (fair enough; that's competition), casts doubt upon the cloud model (not a good idea), talks (from what we can gather) about the advantages of old-school Exchange and Outlook, and then says, "But, hey, our cloud stuff is really great! Even though we're actually behind Google in terms of cloud computing! And we're trying to walk a tightrope between protecting revenues from our traditional products and moving toward a new model! A model that, by the way, we want you to think is insecure and unreliable unless it's coming from which case it's not really, entirely complete yet!"

Granted, it's doubtful that anybody from Redmond used those exact words, but that's probably about how the pitch sounded to the fine elected officials of L.A. It's no wonder Google won the contract. It came in with a clear message, an inexpensive new platform and some sort of vision for the future. Microsoft came in with all sorts of baggage and likely left some decision makers a bit confused.

It's not that BPOS is a bad product. It doesn't seem to be; it's growing in terms of user numbers and capabilities all the time, from what we've seen. And we're sure that Microsoft can and will eventually be a big player in the cloud. It just needs a better game plan right now.

Any more comments to make on this story? Or on the cloud in general, or on Microsoft's cloud strategy? We'd love to hear them at

Posted by Lee Pender on November 04, 2009 at 11:55 AM


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