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Microsoft Action Pack Price Hike Sparks Comment Firestorm (Updated)

After doing the math on Microsoft's late-January announcement about the new $475 price of the Action Pack (it's a 44 percent increase for solution provider subscribers), I hadn't been back to Diane Golshan's original blog post.

When I posted yesterday that the new Action Pack went live this week, a reader responded to ask if it's too late to renew under the old price. To find the answer (yes, it's too late), I revisited the post by Golshan, who blogs for the U.S. Partner team.

It turns out a lot of Action Pack subscribers have been to her Jan. 29 post since I last visited, and they're not a happy bunch.

Between Feb. 7 and Feb. 24, there were 45 visible comments. The new Action Pack went live on Feb. 24 and presumably commenting was turned off then [ed.'s note: see update]. The ratio of unhappy to happy posters was a whopping 12:1, with 36 opposed and three arguing that the Action Pack remains a good value. Golshan had four of the posts, starting on Feb. 12 after some among the flood of negative commenters started to wonder if Microsoft was reading the responses.

The first 15 responses and 29 of the first 30 were extremely negative about the Action Pack price, Microsoft's attitude toward small business-focused partners and the discontinuation of several other small partner-focused programs.

"[T]he price increase is SUBSTANTIAL, with no real benefit to my organization," said Jim Cason, one of the first commenters. (All commenters are identified by the names they chose to post with on the Microsoft blog.)

"In order to sell and support MS software, 'partners' need to assess and familiarize ourselves with MS products. Requiring $475 yearly to do so, just does not make sense to me," said another, Annie Blevins.

Steve T, who identified himself as a Microsoft partner since the 1980s, commented on the historical value of the Action Pack and older, similar programs that involved the core benefit of the Action Pack -- the not-for-resale (NFR) software.

"It was a great opportunity to try new software in a production environment (our office) and also help serve our customers better by testing different scenarios for them with NFR software in our lab -- so that the solution we came up with was a good 'fit' for them. ... I thought it was well worth the small investment though for BOTH us and Microsoft," Steve T wrote. Then he warned, "Don't gouge us with this. You will receive far greater return on your investment if we are treated like partners, rather than 'frenemies' [that another] poster described."

Another commenter identifying himself as Slyfox sounded a similar theme. "I have profited financially from my knowledge of M$ products, and M$ has profited from my knowledge of M$ products. Now the question is, after this many years and thousands of Action Pack dollars, do I want to now pay AGAIN for the few licenses I am using, or completely dump M$? As a partner I feel like they have dumped me."

While many of the negative commenters implied they'd drop their Action Pack subscriptions, Slyfox was one of a dozen who said outright that they'd be canceling their subscriptions. Many said the time had come to pursue competitive offerings, such as Linux and Google Apps for Business.

Microsoft emphasizes other benefits than the NFR software in the Action Pack, but several posters dismissed the value of those elements.

One, posting as Active IT Design, said, "I'm not a developer, I don't build apps, I just don't need anything MSDN. So now the price for me goes up from $329 (Action Pack Solution Provider) to $475 for a 'universal' Action Pack subscription that includes features I don't need. Prices going up, no added benefit and unwanted 'features' (Bing credits come to mind), little value, you can find free coupons for them all over the place."

Like some other commenters, Active IT Design linked the price hike to other recent, unpopular changes. "Killing TechNet and now this, just doesn't make sense to me. It's not about the price either, it's about the price and seeing absolutely ZERO added benefit for a lot of Microsoft Partners. You're slowly killing your smaller Partners. I network with a large group of IT people here in Charlotte, NC and a lot of them are heavily looking into options for themselves and customers that are anything BUT Microsoft."

A commenter named Mark Welte interpreted the change as similar to what's happened among Dynamics partners: "I have been involved in the ERP side of MS for years and they have publicly stated that they do not like to deal with the SMB partners. They have done their best to eliminate all of the small ERP consultants and drive that work to the large shops. This is just the next step with the desktop and server side."

A handful of partners responded that they still find substantial value in the Action Pack.

"I still think that $475.00/yr is a bargain to license my server, 3 workstations and have all my employees using Office 365 E3. The E3 licenses alone are worth the price," wrote M McGovern. Another, Dave Lipman, wrote, "For $500 bucks I have all the software I need to run my business, it's a great value to me. My business exists to support Microsoft products, thank you Microsoft."

Before apparently closing the thread, Golshan wrote, "Thank you all for taking the time to post your candid feedback and comments about the Action Pack changes. I have read all of your comments, and I have also asked our program design team in the Worldwide Partner Group to read them."

The announcement this week of the new Action Pack didn't seem to include any changes in light of the feedback other than in tweaking the messaging to say that small business partners remain important to Microsoft, however. In an announcement blog post, Phil Sorgen, the corporate vice president of the Microsoft Worldwide Partner Group, said, "With so many technology choices facing SMBs, partners bring relevant business solutions to life for customers around the world, and in many ways you make those solutions better. Our many smaller partners make the Microsoft partner ecosystem the most robust and active in the industry."

Sorgen noted that benefits of the Action Pack can reach $40,000, and in a separate blog post, MPN General Manager Julie Bennani said that Action Pack subscribers earn three times more revenues than Microsoft Partner Network members (the MPN tier below subscribers).

UPDATE: First off, the comment portion of the Golshan blog is not closed -- at least two additional comments were posted after this blog went live. I also followed up by phone with Bennani about the negative reaction to the Action Pack price announcement.

Bennani said Microsoft made no changes to the Action Pack based on the review of the blog comments, but contended that Microsoft could have done a more aggressive job communicating the benefits of the new Action Pack approach.

"My team spends quite a bit of time on designing elements. We've been bouncing this around for over a year. We've been testing it with [groups like our] Partner Advisory Councils for that period of time," Bennani said. "As we've seen over and over again, when change is imminent, even when you do those things, you see people two weeks before who are saying, ['I need to check this out.'] We can't catch everyone. We feel great about the offering. We feel great about the price strategy. There's a couple transition scenarios on the IUR [Internal Use Rights] piece that we're continuing to explore with the product groups."

When pricing partner program elements, Bennani said Microsoft uses an equation of $10,000 in benefits for every $100 in partner cost. "It's a 1 percent or less coverage," she said. While she declined to break out how Microsoft arrived at the $40,000 in value, she did push back on criticism of the Bing benefits as having little value. "They're also getting ad credits on Bing, which is hugely important in the future," Bennani said.

Many of the vocal critics indicated they came from the Action Pack Solution Provider side. Bennani agreed that was natural but hopes those partners will give Microsoft a chance. "The Solution Provider subscription was in the on-premise world. We're also sending a message in complement with our Devices & Services strategy. We want those partners to come with us. But there needs to be an opening of the mind of what that means and a trying mentality," she said.

Bennani contended that the new approach with the six Resource Centers represents a radical change to the Action Pack that gives partners ways to experiment with different business models.

"This Action Pack subscription is a different paradigm than the two options we had in market before.  They were discrete. You had to pick one or the other and you had to pick different price models. What we've launched is all the benefits, plus. We've blown out the number of business models that we're providing assets around [including training for each], in addition to providing cloud IUR by bringing in Cloud Essentials," she said. Adding in MSDN subscriptions  and Azure helps Microsoft build capacity of partners who can develop custom business and mobile apps and integrate customers' infrastructure with the cloud. "That's at one price point," she said.

"We need that healthy broad ecosystem that we've always had. We're continuing to add value to the non-managed and the longer-tail set of partners and/or those building business practices. In some cases, existing partners [start new or experimental practices in] new offices. We want to assist in partners building new practices in predictable ways. That's why we took the Resource Center approach," Bennani said.

The comment section of the U.S. subsidiary blog isn't the whole story, either, Bennani implied: "What's interesting is we've had the biggest sign up days in a row in the history of these subscriptions. What was our previous high, we've beaten Monday, Tuesday and now Wednesday."

Posted by Scott Bekker on February 27, 2014 at 5:22 PM