Intermedia, Microsoft Negotiate Office 365 Billing

By Jessica Davis  |  Print this article Print

Intermedia's COO says the Exchange hosting giant is in talks with Microsoft about its plans to own the billing for Office 365 and changes are under way.

What does Microsoft Exchange hosting giant Intermedia think about Microsoft's Office 365 and the software giant's current plan to own the billing for the cloud-based version of Microsoft Office? Not so much.

Like many Microsoft partners, Intermedia isn't really interested in carrying Office 365 as long as Microsoft retains control over the billing, according to Jonathan McCormick, chief operating officer for the New York-based hosting company, which now manages more than 300,000 Exchange mailboxes.

"Right now we are in conversations with Microsoft around Office 365," he told Channel Insider. "If we reach an agreement, there may be some co-branding or reselling of some of those services.

"… If we can't own the billing relationship, we won't do it," he said. "We don't know if they will change the program in full or have a different deal for some people. But they are definitely making changes in that line, or we wouldn't be talking about it."

Microsoft's Senior Communications Manager Adam Carroll recently told Channel Insider to expect the issue around Office 365 billing to be resolved to the satisfaction of Microsoft channel partners. Carroll, who has previously spent time in several different Microsoft product groups, is now serving as the communications chief for Microsoft Channel Chief Jon Roskill.

Intermedia held its partner conference in mid-March, announcing the record number of Exchange seats for the company. The year 2010 also marked the first where indirect revenues equaled direct revenues, said McCormick. But that's not expected to stay the same in 2011. Intermedia now has about 6,500 partners, about a third of which are active. Most are MSPs and regional MSPs who truly serve customers in the trusted adviser role. The company also has partners that are Web hosting companies and also some enterprise partners such as CSC and distributors such as Ingram Micro. And there is an affiliate program.

This year Intermedia expects partner revenues to total more than direct revenues for the first time in the company's history, according to McCormick.

What about other competition in the market? Google Apps used to be a bigger topic of conversation during the recession, McCormick said. Not so much anymore.

"We spend almost no time talking about Google anymore. We see Google Apps from time to time," he said. McCormick added that every once in a while an Intermedia customer will move to Google Apps or a Google Apps customer will move to Intermedia.

"It was much more of a topic of conversation throughout 2009 when the economy was slow," he said. "But we've grown every month for four or five years now."

As for Intermedia versus Google Apps, McCormick points out that Intermedia can offer customers a 24-hour help desk service with a "real technician answering the phone. We are focused on knowledge-based workers where productivity in email is really important to the business. We feel we are serving a different segment."

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com