2014
05.21

I did not expect this announcement until WPC, but it’s come out today. Microsoft announced, via a video, that Microsoft Azure will be available for resellers to sell, and customers to buy, through Open licensing on August 1st 2014. Yes, Azure is coming to the channel. Previously Azure has only been available direct (credit card) or via Enterprise Agreements.

Phil Sorgen took to the webcam to record this message. A blog post was also written by Josh Waldo, Senior Directory, Cloud Partner Strategy. There is also a FAQ for Azure in Open licensing. There will be a “ramp up” online event on Microsoft Azure in Open Licensing on June 4th. Register here.

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Sorgen starts off by saying that Microsoft believes in joint success with partners, and in making business with Microsoft easier for partners. These two pillars are central to an exciting new opportunity for partners.

He announces it: Azure will be available through the distribution channel via Open licensing for partners to resell to their customers.

Azure allows partners to serve more customers without increasing their footprint. Successful cloud partners have learned how to expand their services beyond basic deployments. Think business IT-enabled consulting. Partners have increased revenues, but they had to evolve their business models.

Personally, I know of one services business that automates to an incredible level and cloud services fits their model perfectly. Before the recession they shifted tin like everyone; they evolved and now they are flourishing, and taking business from legacy service providers.

“Moving to cloud is a process not an event”: true for partners and customers. Azure can become even moer compelling. Note that Azure contains many hybrid cloud services, enabling “on ramps” to services that extend the functionality of on-premises IT, making it easier for businesses to explore and adopt Microsoft’s public and hybrid cloud offering.

Azure in Open will be flexible, provide compliance manageability, and provide value for customers. The consumption based billing provides a low barrier to entry, making it easier for SMEs to deploy services without huge CapEx costs. “Consumption aligned billing” is one of the buzz phrases. Focus on services instead of tin.

There is a new licensing model with Azure in Open.

Moving over to the blog post:

The cloud is growing 5 times faster than traditional IT. Microsoft alone is thought to purchase 17% of all servers on the planet in a year. “Additionally, partners that are building strong cloud businesses have 1.6X of recurring revenue as a portion of total revenue versus other partners”.

How does this licensing model work?

When you resell Azure in Open Licensing, you purchase tokens from your preferred Distributor and apply the credit to the customer’s Azure Portal in increments of $100. The credits can be used for any consumption-based service available in Azure. To add more credit, you simply purchase new tokens and add them to the account. This gives you the opportunity to manage your customer’s portal, setup services, and monitor consumption, all while maintaining a direct relationship.

In other words, you will buy Azure credit in the form of $100 tokens (I guess there will be localized versions). You can then use that credit in any way on Azure. It will be up to you (the end customer) to have enough credit to do what you need to do or to keep your services online. The advantage here is that you’re controlling costs (unlike post-usage credit card) and you don’t need to pre-purchase a huge credit (like with EA) before you know what your services will cost. I suspect that if partners want to, they can operate a service to help customers manage their credit.

A token comes in the form of an Online Services Activation (OSA) key. If you want $1000 in credit, you buy 10 SKUs of $100 and get 1 OSA key for the sum credit. The value has a 12 month life, starting from when the customer redeems the OSA key online – this credit will not roll over so don’t over purchase for a year. A customer can top up at any time. If they cannot reach a reseller (weekend), the customer can top up using a credit card. The program will be available through:

  • Open commercial
  • Open Academic
  • Open Government

Partners can request co-administrator accounts on their customers’ accounts to help them manage their service. Alerts can be configured for when credit runs low and needs to be topped up.

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IMO, this is great news for partners. They can now choose to resell Azure if they want, and keep the billing/customer relationship – something that caused fear in the past (“cloud vendor X is trying to steal my customers”). Some might not want billing overhead and might go with another option.

Also, this announcement reinforces Microsoft’s unique selling point in the cloud wars. They are the only company with a private/public hybrid cloud model that spans on-premises customer owned, hosting partners, and Azure. Microsoft is also the only cloud vendor with a partner-enabling model.

By the way, partners & customers in Ireland, if you want your techies to learn about Hybrid Cloud then you might want to send them to TechCamp 2014 in June.

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