Microsoft Cuts Partner Payouts on Some Cloud Services

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Microsoft relies on its partner channel to distribute its cloud services, but its latest decision to cut partner payouts has angered many partners, according to a report Friday by 

Starting on January 25, partners in Microsoft’s Advisor Enterprise Agreement Deploy program will see the lower fees, which will give partners less incentive to push Microsoft cloud services like Office 365 and Exchange.

Microsoft said the lower partner payouts match up with the 15 percent price cut for Office 365 volume licensing it made in August. Also, Office 365 add-ons, introduced around the same time, cost less than the full Office 365 subscriptions because they can be added to an existing Enterprise Agreement. This too was taken into consideration when lowering the partner commissions, it told

According to the report, for some partners, commissions could drop between 40 and 50 percent with the change. That means, for example, if a partner was to sell a 300-seat deal for Microsoft’s Office 365 E3 plan, they would make around $6,000, in contrast to the $12,000 they could expect to make through the old system.

Indeed, Microsoft has been restructuring the cloud-side of its business over the past few years, offering a few different partnership programs. One analyst suggests that Microsoft wants to move away from partner-based selling to a direct relationship with its end customers, but this seems unlikely considering the amount of money it has invested in developing partner resources and nurturing its channel.

Recently, Microsoft launched its new Cloud OS network, a program of more than 25 cloud service providers that have built services on the Microsoft Cloud Platform.

The changes could also reflect Microsoft’s recent focus on enterprise customers, which likely benefit from a one-on-one sales relationship with Microsoft.

The decision to cut payouts would certainly hurt hosting providers that are partners with Microsoft and resell certain cloud services.

Earlier this week, the City of Boston announced that it chose Google Apps on Google Cloud after using Microsoft Exchange. Microsoft lost the bid for the 76,000 seats at the city.

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One Comment

  1. I'm still in disbelief that people still use MS office.