Summary
Microsoft recently announced its intention to accelerate growth in the AI era by increasing partner involvement. While this appears to be a promising opportunity for collaboration, certain aspects of this strategy raise questions about who really benefits – and whether it is as partner-friendly as it first appears.
Who Really Gains From New Commerce Structures?
Microsoft is encouraging small and midsize businesses (SMBs) to work with Cloud Solution Providers (CSPs), framing this as offering greater "customer choice." In parallel, the company is also making it harder to renew Enterprise Agreements (EAs) directly, pushing many larger customers towards the Microsoft Customer Agreement for Enterprise (MCA-E). It's questionable whether Microsoft is genuinely prioritising customer choice or simply steering customers towards channels where it has greater control over pricing and terms. This appears to be a strategic manoeuvre to consolidate purchasing paths that ultimately drive more revenue back to Microsoft.
For partners, this shift to MCA-E raises a critical question: does this model truly empower them to add value, or does it limit their flexibility and control over pricing?
Partner Incentives: A Long-Term Boon or Short-Term Bait?
Microsoft claims to be investing heavily in partners who serve SMBs, with 70% of its partner investment spending going to those serving this market. These incentives, however, are tied to ongoing customer engagement, requiring partners to continually prove their worth and placing them under significant pressure to deliver results.
Will these incentives remain sustainable in the long run, or will they disappear once Microsoft achieves its goals, leaving partners struggling to support customers without their backing?
Monthly Billing at a Premium
Microsoft now offers monthly billing for annual subscriptions but with a 5% surcharge. Such a policy begs the question of whether this "flexibility" is truly beneficial for customers. It appears to be another way to nudge customers towards upfront annual payments, which may not be ideal for everyone's cash flow. This subtly urges customers back to upfront annual payments, which offer better pricing but reduce cash flow options.
Partners need to consider how this pricing strategy affects their customers, especially in the current uncertain economic climate. Is it truly about customer needs, or is it primarily about protecting Microsoft's revenue?
The AI-Ready Push: Short-Term Gains vs. Long-Term Dependencies
Microsoft is offering a 15% discount on Microsoft 365 E5 to encourage AI adoption. This discount, however, only spans six months and excludes existing users, suggesting a push for rapid adoption of a specific suite. As Microsoft continues to integrate AI into M365 E5, it could become increasingly essential – and expensive – for businesses.
Partners should consider whether this "AI-ready" push represents a genuine growth opportunity or a way to lock customers into a potentially costly ecosystem.
Public Sector Pricing Adjustments: More Questions than Answers
Microsoft is updating its Maximum Resale Price (MRP) formula for public sector customers, with the changes coming into effect in July 2025. However, details remain scarce. The lack of specific information creates uncertainty about the potential impact on partner margins, particularly in regions with higher costs.
How will these changes affect partners' profitability and competitiveness in the public sector, especially when considering the added administrative burden and compliance costs?
The Bottom Line: Partners and Microsoft's AI Ambitions
While Microsoft claims to be prioritising partners in its AI strategy, its actions suggest a focus on controlling the ecosystem and driving its own revenue goals. Partners need to carefully evaluate these changes and ask themselves:
Who truly benefits from these strategic shifts—partners, customers, or Microsoft itself?
Will the incentives and flexibility last, or are they contingent on partners and customers following Microsoft’s vision without deviation?
In the AI era, Microsoft appears to be playing a high-stakes game, holding the cards close to its chest while presenting an illusion of choice. Partners would be wise to proceed with caution, with a clear understanding of their own interests and long-term sustainability. Microsoft's vision may not always align with their own.