Microsoft Unveils Plan To Sell Subscription-Based Windows 10 Enterprise, Surface Devices Through Channel Partners

Microsoft on Tuesday unveiled plans to let a select group of channel partners sell Windows 10 Enterprise Edition and Surface 2-in-1 devices on a subscription basis, a move that underscores its growing ambitions in the ’as-a-service’ market.

Starting in the fall, partners in Microsoft's Cloud Solution Provider program (CSP) will be able to provide their customers with a subscription to Windows 10 Enterprise as part of a managed service offering, Matt Barlow, Microsoft's general manager for Windows marketing, said in an interview.

Microsoft is now also letting some partners lease Surface 2-in-1 devices to customers on a subscription basis, according to Barlow. The program is open to partners that are both certified as Microsoft Cloud Solution Providers and as Surface Authorized Distributors.

[Related: 10 Reasons To Not Upgrade To Windows 10]

Microsoft’s CSP program lets distributors, MSPs, ISVs and hosting provider partners directly provision cloud services and handle technical support for customers, while also maintaining a direct billing relationship. A Microsoft spokesman declined to provide a current number of CSP members, but it's believed to be a small fraction of the vendor's worldwide partner base.

Although Windows 10 Enterprise has mostly been deployed by large businesses with thousands of users, the subscription option and price point will make it more attractive to smaller organizations, according to Barlow.

The subscription to Windows 10 Enterprise will have a list price of $7 per seat monthly. A Microsoft spokesman told CRN the $7 per month per seat cost has built-in profit margin for partners, though he declined to specify the amount.

Partners selling the Windows 10 Enterprise subscription may be able to benefit by packaging it as part of a larger Microsoft cloud service offering—perhaps including Office 365 and Dynamics CRM, for instance—and charging recurring management fees through one contract for the whole package, Barlow said.

But Microsoft is also hoping that the Windows 10 Enterprise subscription option might prompt an upgrade at businesses that are still running older versions of Windows, such as the popular Windows 7. Many businesses have not been enticed yet by Microsoft's free upgrade to Windows 10 Pro or Home, which is being offered through July 29.

Ric Opal, vice president of Peters & Associates, a Microsoft partner based in Oakbrook Terrace, Ill., told CRN he thinks the move to offer Windows as a subscription through partners will clarify the value proposition for Windows products.

"I think that partners always have had a job to do in explaining the value of different Microsoft products and solutions," Opal told CRN. "The more those products can be brought to the partner where they can control the context of the solution, the healthier it is for the partner, and the better it is for the customer."

But Steven Freidkin, president of Ntiva, a Microsoft partner in McLean, Va., said he sees more value in managing licensing on behalf of his customers than in getting margins on sales of Windows as a subscription.

’Historically, there's no margin in any of these Microsoft [cloud] products anyway,’ Freidkin said. ’The opportunity is to make sure we're making the right recommendations for the client in line with their actual needs."

Reed Wiedower, chief technology officer at New Signature, a Microsoft partner based in Washington, D.C., said the moves will open up new opportunities for Microsoft partners to help enhance security practices of their customers, particularly in terms of managing security for mobile devices.

"When it comes to launching a Windows 10 Enterprise as a subscription, we couldn't be more excited for both our own organization as well as for the partner channel, he said.

Microsoft said that four additional resellers—CDW, Insight, SHI and Zones—will now be able to provide Surface devices and accessories to their enterprise customers. Microsoft also said that IBM and Booz Allen Hamilton are joining Dell as integrators of Windows 10 solutions for Surface devices, as part of the Surface Enterprise Initiative.

Microsoft is holding its annual Worldwide Partner Conference in Toronto this week.