Will the BPOS Price Cuts Hurt Partners?

As Microsoft seeks to extend its platform to the cloud, the company continues to hit some turbulence.

Just as Microsoft was slated to launch its Windows Azure cloud services at last month's Professional Developers Conference in Los Angeles, Amazon.com Inc. swooped in and slashed the cost of its services by up to 15 percent. Amazon also added a relational database hosting service, a feature that makes the cloud more attractive for enterprise applications and one that Microsoft is readying as well.

Meanwhile, in another major blow to Redmond, the City of Los Angeles in late October chose Google Inc. to run its online e-mail service. It was a closely watched competition between Microsoft and Google for a city-wide government network.

In an apparent response that has some partners furious, Microsoft last month slashed the price of its Business Productivity Online Suite (BPOS) from $15 a month to $10 a month. Some partners are even accusing Microsoft of offering BPOS below cost. BPOS consists of hosted collaboration and communications software based on Microsoft Exchange Online, SharePoint Online, Office Communications Online and Office Live Meeting.

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