How to make money with Microsoft Hosting?

How to make money

Steve Ballmer

CEO, Microsoft Corporation

„Software + Services will dramatically change our ecosystem,

and that‟s positive, and that‟s good.‟

Steve Ballmer, December 2006

„All our software will become Software + Services within the

next few years, mark my words‟

What is Your Role in this Market Opportunity?

Platform Provider

• Technical expertise in building complex platform

• Operational expertise in managing it

• Up front investment

• White label provider for other partners and Telco‟s

• Key: Managing a strong partner channel

• Action: Contact your local SPLAR to sign SPLA

Trusted Advisor

• Sales and marketing expertise - understanding SMB customers

• No up-front investment

• Have an installed base of existing customers

• Re-sell hosted solutions from a platform provider

Dedicated

Hosting

Some

IT

Services

Finished or

managed IT

Services

Web

Hosting

_Opportunity

IT

Evolution of Hosting

Hosting

Market

Services Path To Revenue

Customers that buy

subscription software are more

inclined to buy subscription

partner services

Resell/Host

Managed

Services

Integrate

Customize

Migration and Integration Project Based _Revenue

Business Process consulting, SharePoint workflow design, Intranet customization

Repeat Revenue

Resell/Host Transactional_Revenue

Desktop Management and Optimization, end user support

Recurrent Revenue

Consult

€50-€150/month

$

Business

Applications

Web

Conferencing

Security

Backup & Filtering

Unified

Communications

Mail

Document

Collaboration

€2-€20/month

€5-€40/month

€2-€15/month

€5-€20/month

€20-€40/month

Web access

through to

full client &

mobile push

Document

sharing and

collaboration

Outsourced

security, spam

filtering &

backup

Web

Conferencing

Integrated

e-mail, IM and

VoIP

capabilities

Business Apps

like Dynamics

CRM

Partner Hosted Partner Hosted

Microsoft

Partner Hosted

Hosted

Microsoft

Hosted

Partner

Hosted

Hosted Exchange + SharePoint Solution Overview

• Optimized for deployment by service providers • Simplified user (self)

management etc

Solution

based

Exchange

2007

• Using the Service Provider License Agreement (SPLA) • Pay-as-you-grow model

Licensed

to

Microsoft

Partners

• Typically also purchase additional storage, mobile access, anti virus/spam

End

customer

“rents” a

mailbox

For SMBs Hosted Exchange

TCO is predictable, requires

little IT resources and ROI

simple to understand and

calculate

Hosted Exchange addresses

SMB purchase inhibitors

Lack of Exchange TCO and ROI

Inability to obtain funding

Fear of project cost overruns

How to Sell Hosted Business Email

Small Business (1-24 PCs)

• Online

• Telesales

• Small Business Specialists

(resellers)

Midmarket (25-500 PCs)

• Online

• Direct Sales

• Indirect Sales – reseller partners

Bundling

Up Sell

Private

/Whi

te

Label

Monetizing the Up Sell Opportunity

Providers programmatically driving

POP to Business email campaigns

• Migrate all users on HMC/Hosted Exchange

• Give all users 2 month free Business Email trial

• Use the 2 months to ensure new features are

actively used

•

80%+ of active trial users buy Business Email

• Overall >20% up sell conversion is benchmark

(10% is baseline)

Additional Up Sell Opportunities

Push Mail

•15% of SMBs “Best Candidates” for HMC

24% if a decision influencer uses Windows Mobile

•42% of Windows Mobile users would pay for push mail

• Very quick time to market – little up front investment

• US$20 per user per month revenue opportunity US$7 margin

• Basic and higher end email security services

• No up-front investments, rapid deployment

• Offering multiple services/solution for segments/verticals

• Minimal incremental costs • „Viral‟ selling

Microsoft‟s Hosted Solutions are Mobile Ready

Hosted Exchange

• Professional

Email + Mobile

Push

Hosted

SharePoint

• Intranet/Extranet

+ Web 2.0

Business Apps

Hosted CRM

• Mobile business

applications

Hosted Unified

Communications

• Hosted Office

Communication

Server

Channels: Indirect Microsoft partners reselling hosting

• VARs, ISVs and Solution

Partner

How many

are

interested?

• Stay ahead of competion: S+S

• Extend role as Trusted Advisor

Why are

they

Interested?

• Generalists, Managed

Services Providers or Web

VAPS

Who is

most

interested?

• More business and new

customers

• Sell new and more profitable

services

What is the

benefit to

the

Solution

Provider?

Very Interested 32% Somewhat Interested 41% Not Interested 27%

Partner interest in Working with a

Microsoft Hosting Service Provider as a

hosting reseller (versus becoming a

hosting provider themselves)

Hosting Partners will need to

build effective programs that

support their resellers

Microsoft‟s Investment in Hosting Partners/Resellers

•

Market research

•

Microsoft Partner Program

•

Technical Adoption Programs

•

ADS - Architecture & Design Session

•

BDS – Business Development Session

•

Technical training

•

Sales Training

•

Sales and Marketing Toolkit

•

End User Training

•

Go-To-Market Support

Microsoft‟s Investment in Hosting Partners/Resellers

•

Sales Training

–

300K+ investment from Microsoft

–

Decks and recordings (English)

–

Web-based Sales and Support

training modules

•

HMC Sales Toolkit CD

–

Marketing email templates,

brochure template, product

manager guide, persona

descriptions, battle card,

objection handling, telesales

script, sales presentation, web

site template, TCO tool

Summary and Call to Action

Opportunity:

• EUR 56M+ for hosted Business Email

• Up Sell your Installed Base of mail users?

• Up and Cross Sell additonal Hosted Services

Your role in this market:

• White Label Platform Provider

• Hosting Reseller

Action:

• Build technical readiness and a sales channel

• Build sales/marketing readiness

THANK YOU!