Office 365: What Does It Mean for Hosting Providers?

REDMOND, Wash. — Oct. 19, 2010 — Today we announced Microsoft Office 365 (accessible at, which we believe will define the future of productivity. Office 365 is a new cloud service that brings enterprise-grade productivity to everyone, helping professionals and smaller organizations get access to enterprise-grade productivity solutions for the first time, and helping larger organizations reduce costs and stay current with the latest innovations more easily. This is an important announcement for the industry and Microsoft. You can learn more about Office 365 on the new Office 365 blog and at the Microsoft News Center where you can also watch our global press conference announcing the new cloud service.

As vice president of business channels for the Worldwide Communications Sector at Microsoft, I wanted to offer my perspective on this news and explain the opportunities this represents for our valued hosting provider partners.

In the small and midsize business (SMB) segment, hosted e-mail is extremely fragmented — with Microsoft Hosted Exchange accounting for only a small percentage of the space — and this is where we see a huge opportunity for both Microsoft and its hosting provider partners to grow. Within the current landscape, we’re continuing to see significant growth rates of partner Hosted Exchange seats, with an 18 percent increase worldwide last year.

Office 365 for small businesses is targeted at customers with up to 50 users. It includes access from virtually anywhere to e-mail, documents, contacts and calendars, and is easy to try out, simple to learn and straightforward to use. It works with Microsoft Office, which most of these small businesses are already using, and is simple to manage without IT expertise due to its basic administration features. Office 365 for small businesses is backed by Microsoft with a 99.9 percent uptime guarantee.

Office 365 Small Business is a great offer, but that is really only the start — and that’s where our hosting provider partners have a major role to play in expanding the proposition by offering value-added services that extend beyond the features offered in Office 365 Small Business. Some of those services could include customized services IT tools, phone support, the ability to grow beyond 50 users, sync with Active Directory, advanced IT management, enterprise-class e-mail, Web content management, business intelligence, additional storage, security features, archiving and the full Microsoft Office suite.

CE On-Demand will fully embrace Office 365 as an important addition to our cloud services portfolio,” saysViktor Kovacs, chief operating officer of Central Europe On-Demand (CE On-Demand). “It will represent an additional choice to end users as to service provider and content, and it will also provide the opportunity to include applications developed by CE On-Demand and ISV partners to end users as complete cloud-based solutions. Integrating Office 365 into our portfolio aligns with our vision and business strategy of driving innovation into cloud services and the underlying technology. Office 365 will help CE On-Demand better integrate Microsoft-based solutions into our cloud portfolio and give us the opportunity to better manage capital expenditures on increased hosting infrastructure.” (Read the full blog post from CE On-Demand.)

Michael Murdoch, CEO and president of AppRiver, says, “We are excited to learn about the Microsoft Office 365 Small Business offering as it reflects Microsoft’s commitment to the growing software-as-a-service market. Today, businesses value agility and flexibility more than ever and are reaching for a broader range of solutions. Microsoft has been a great industry partner to AppRiver throughout the years, and we are excited about Microsoft’s approach to blend its core strengths with partners’ key value propositions in order to deliver flexible, feature-enriched solutions to customers.”

Microsoft sees service provider partners becoming more important as the cloud becomes more predominant. Given the experience of hosting service providers in deploying and selling infrastructure and cloud services, businesses will depend on them for IT as a service. For Microsoft and its hosting partners to effectively compete and succeed together in the under 50 users segment and beyond, Microsoft is working with partners to move them from commoditized hosting services to become one-stop, location-independent IT providers.

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