Tuesday, July 20, 2010

Cut-Price BPOS Hits Smaller Players Hard

Not only is Microsoft taking to their competitors with an axe, but they are not leaving much room in their pricing structure for their partner channel to make any form of profit.  Yes, BPOS (and its competitors) can be quite good for certain clients, however there's close to SFA margin in selling BPOS, which makes it hard for Microsoft's Partner channel to provide quality service to their clients to which they are sellig the BPOS solution.

That means that Microsoft's Partner channel isn't all that enamored with Microsoft these days and is looking at their options - and a number of those options exist outside Microsoft.  Options such as Kerio Connect.  Options such as Linux.  Options that still include both onsite and hosted components.

SBS 2008, for example, needs a Quad Core, 12GB with fast RAID HDD system to be installed on.  You *could* drop that to 8 GB RAM if there are less than 10 users and these users aren't heavy email users, but that's the realistic minimum spec.  And that's going to set you back somewhere in the ballpark of AU$8000+, not including the operating system.  SBS Code Name 7 will likely require 16GB RAM and *may* work with 12GB.

A Linux solution could be configured on a much less powerful server, somewhere in the $3000 vicinity.  Remember, this is an SMB - not a company with 250 staff and $75m+ of turnover.  An SMB.  Even Microsoft's upcoming SBS Code Name Aurora, with its BPOS integration, will require a not insignificant investment in an on-premise server - more than an equivalent Linux-based solution would cost.

So, keep an open (source) mind, keep an eye on what the REAL needs of the business are, keep an eye on what non-Microsoft solutions are around, keep an eye on what the business can actually afford and keep an eye on the cloud - hybrid solutions and even on-premise solutions are more than suitable to many SMBs.  Just as cloud solutions are suitable for some, too!  :)

We all need to make profit to live - living off the crumbs of BPOS alone won't be enjoyable.  There's a lot of change coming in the IT industry and BPOS isn't the only option on the table.


The Outspoken Wookie


Pankaj said...

I don't think channel partners need worry all that much. Fact is, BPOS is the kind of solution which needs implementation and maintenance support. There always be room to make a cut.

Hilton Travis said...

G'day Pankaj,

There's definitely some maintenance required, but a lot less income to be made from it compared to on-premise solutions, and a lot less income means that a partner will need to spread themselves out to more clients, making it harder to assign time to a particular client as and when needed, or to make less income all up, making it harder to *want* to assign time to clients when there's no financial benefit. Or to move into rose gardening! :)

Of course, as has always been the case, the IT industry is fast changing. It is just than now the monopoly companies in the IN industry are taking work away from the smaller partners who know multiple products from multiple vendors, trying to consolidate the end users into one-vendor suites without looking at (and often even understanding) the end users nor the third party products.

Pankaj said...

Thanks for your reply Hilton. Yes, the margains are going to get thinner, that's for sure. But not so thin that the industry will die out. The Google Apps partner program is thriving isnt it? And BPOS, which is inherently more maintenance intensive and enterprise oriented than Google Apps, is more suitable for the channel.