It’s a little complicated.
A few days ago Microsoft announced a price drop on Office 365 around the world. This is the first time the prices have been changed since the launch of the product in mid-2011.
Microsoft has lowered prices on other cloud services such as Windows Azure and SQL Azure before so this wasn’t a complete surprise. While the updated prices were visible immediately on various regional versions of the Office365.com, the prices remain unchanged in Australia.
Immediately the cry went out that Telstra was continuing to gouge Australians for Office 365. This wasn’t helped by the fact that the Telstra PR engine remained tight lipped about the price drop.
Something that many are not aware of is that while Telstra is the only telco reseller of Office 365 (aka “syndication partner”) with exclusive rights, there are many other syndication partners in the world that are also yet to drop their prices for Office 365 in line with Microsoft.
Why are they not doing this straight away? It is simply a matter of logistics.
Syndication partners purchase Office 365 licences from Microsoft and have built very intricate pricing models within their own markets. As in normal business when a manufacturer changes their prices the changes are not seen on the shop floor immediately. Many systems need to be updated and calculations changed.
In the case of Office 365 there are already customers on the subscription – so the question now arises of their current pricing and when it will be discounted. I have heard from some of my Office 365 MVP colleagues that even customers in the US are not seeing the discounted price reflected on existing subscriptions – only on purchases of new licences of a different type. For example a customer with E1 licences wanting to purchase more licences will still pay the same price, however if they purchase E2 licences they will see the new discounted price.
Something else that needs to be considered are the partners in this mix (such as myself at Paradyne). Partners make a commission from Office 365 licences so now they will simply have to make do with earning less. Some partners will not have an issue with this as they realise that Office 365 sales are about volume, so a 20 percent cut in commission revenues needs to be replaced with more customer sales (which should be easier with the discounted pricing).
One thing that was left off the public announcement is the new discounted pricing for SharePoint Online additional storage. While the pricing is not visible anywhere on the Office365.com site, Mark Kashman, product manager for SharePoint Online, noted on Twitter that additional storage has dropped from US$2.50 per GB to only US$0.20 per GB. That is a drop of 92 percent and makes using SharePoint Online even more competitive against solutions like Dropbox and other online disk providers.
So when will these amazing discounts be seen in Australia through Telstra? Hopefully in the coming few months. All we can say from a marketing perspective is that Telstra would be foolish not to pass on at least some of the discounts.
Loryan Strant is a Microsoft Office 365 MVP (Most Valuable Professional). Follow him on Twitter @TheCloudMouth.
