To woo partners, cloud computing vendors show them the money

Deals, discounts used to attract partners to sell vendor's services

One of the early promises of software-as-a-service and cloud computing was that it would allow startups to directly market their Web services while skipping the expensive, lengthy process of creating an ecosystem of partners and resellers.

"Building the channel" was an antiquated strategy, they argued, a legacy of on-premise dinosaurs such as Oracle Corp. and Microsoft Corp.

Cloud providers thought, "we can directly reach these people, so we don't need to invest in other channels outside of our brand," said Tiffani Bova, an analyst with Gartner Inc.

But with cloud computing still more hype than actual deployments, vendors slowly began to accept that "a single sales strategy will only get you so far," Bova said.

That has resulted in three out of the four largest cloud computing vendors taking major steps in recent months to attract partners to help them market and sell their respective services.

Last month, Microsoft announced prices for its coming Windows Azure platform-as-a-service (PaaS), including a 5% discount off consumption pricing for Microsoft's 400,000 global partners, and a half-year discount of 15% to 30% off consumption prices (For example, per megabyte stored per month) for those signing a minimum six-month contract, plus two as-yet-undetailed subscription plans for partners.

A month earlier, Google Inc. had announced that resellers of its Google Apps productivity suite would get a 20% discount off list price, as well as retain the desirable middleman role with customers.

Google responded to Azure's pricing news a few weeks later with an aggressive marketing campaign in support of Google Apps and its closely related platform-as-a-service, Google App Engine.

The most recent move was by Inc., which on Wednesday introduced a new program to attract value-added resellers (VARs).

The highlight is that VARs will be able to obtain for as little as $7.50 per user per month. That is 70% off the list price of $25 per month for each end user.

Partners such as Adam Caplan, CEO of Model Metrics, a Chicago Web development firm, said's plan is very financially attractive.

"We can get real margin on recurring revenue, which is a beautiful thing," he said. Moreover, Salesforce's VAR program encourages, not forbids, Model Metrics to resell to the 500 customers it shares today with, he said.

Salesforce takes lead in winning developers partners are also allowed to participate for free in the company's AppExchange, an eBay-like marketplace for cloud apps. There are 800 apps available today on AppExchange. A more impressive 120,000 apps have been built and run via

Competition for partners is heating up as developers start to move en masse to the cloud. According to a survey published in August by Evans Data, nearly half of developers expect to deploy apps to a private cloud within a year.

Even before its VAR program, had the biggest lead in winning developers, according to Rebecca Wettemann, an analyst with Nucleus Research, because it provided tools that made it an average of five times faster to build software on than on Java or .Net.

"Anyone can build a data center. What has done is package an entire test and product environment and now with sales and marketing support," she said.

"The beauty of is that development is easy," Caplan said. "It's clicks, not code."

It's unclear, however, how much that has yet to translate into real profits for During its second-quarter earnings call last week, the company said that "25% of its business" that quarter came outside of its core CRM-on-demand business, in ventures including

By contrast, the company that has done the least to woo developers and resellers appears to be doing the best, financially.

Amazon Web Services, according to figures released in July by during its quarterly results, appears to comprise the biggest chunk of a category that is already a $550-million-a-year business.

That's despite Amazon not offering any preferred discount to partners, nor providing much technical handholding, Caplan said. "It takes a lot more technical skill to use AWS," Caplan said.

That didn't stop Model Metrics from reselling both AWS and to customers. For one, AWS' prices are "dirt cheap," he said. It's also a "more developed platform" than Google App Engine, and thus complementary with

Microsoft: The big question

The biggest wildcard is Microsoft, which had long insisted that cloud services alone would not be enough to displace its on-premise dominance.

The shift by most cloud providers toward a partner-centric model pulls them closer to Microsoft's home turf, where the software maker has "the money, the size and the power," Bova said. Ninety-five percent of Microsoft's $60 billion in annual revenue comes from its 400,000-strong partner army, she said.

The 14,000 members in Microsoft's elite Gold partner program alone are more "than Google, and have combined," Bova said.

But mobilizing these partners to tout Azure and Microsoft's other cloud services, such as its Business Productivity Online Suite, is no slam dunk.

For one, Azure, due to launch in November, remains "PowerPoint-ware," Wettemann said. Also, many of these partners are small "mom 'n pop" shops who may prefer to cling onto existing business models, she said.

And there's no guarantee that partners who switch to selling Microsoft's cloud wares will do anything but substitute Microsoft' existing on-premise software revenue.

That's not true for cloud-only players such as, Google and

Bova, meanwhile, says that Microsoft hasn't shown an ability to be as nimble as other cloud players. Google, for instance, "has made some very quick decisions that a larger organization [like Microsoft] can't," she said.

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Tags cloud computing

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Eric Lai

Computerworld (US)
Show Comments

Most Popular Reviews

Latest News Articles


PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?