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Microsoft NZ fights back amid furious channel backlash

24 Jan 14

Following widespread channel outrage at proposed changes to Office 365 partner incentives this morning, Microsoft New Zealand has hit back, insisting the company is not decreasing margins but making changing "product pricing and mix".

As reported first in New Zealand by The Channel yesterday, via CRN sources, Redmond is alleged to have put in place plans to cut the fees partners currently receive from its Online Services Advisor Incentives program.

Yet the software giant’s New Zealand branch, keeping in line with comment from other Microsoft regions, has questioned the report, insisting no reductions or cuts have been issued, more a “change in mix.”

“There are some changes for our Large Account Resellers (LAR's) selling Office365 via Enterprise License Agreements but this is primarily a result of updates to Office365 product pricing and mix,” says Paul Bowkett, Senior Partner Channel Development Manager, Microsoft New Zealand.

“There is no change in the rate percentages within our Online Advisor Service incentive - which currently offer generous margins.

“Channel Incentives on the whole are in fact increasing, and especially for our cloud partners selling via our Advisor and Open licensing models, especially due to the increased channel rebates we offer.”

Effective from January 25, CRN sources claim partners who sell cloud services such as Office 365 and Exchange Online will now make less money, with cuts apparently ranging from 15% to 50% in some cases.

Yet adding to Bowkett’s response, Brent Kendrick, Partner Director, Microsoft New Zealand, says that the changes have been misunderstood.

“I note that your article included comments on this matter made yesterday by our Australian subsidiary,” says Kendrick, via an emailed statement to The Channel.

“I align to their comments, in that this is not a reduction or cut, but a change in mix.

“We are in the process of communicating directly with our partners in New Zealand about this, and we remain confident that our incentives model provides the greatest partner opportunity for building a profitable business in the cloud.”

Echoing Microsoft New Zealand’s comments, a spokesperson for Microsoft Australia told CRN that the company’s cloud-focused incentives have doubled year-over-year in terms of dollars and a percentage of the overall mix.

“We are confident that our incentive programs provide the greatest partner opportunity for building a profitable business in the cloud,” a spokesperson said.

The Channel has contacted Microsoft New Zealand partners for comment on how this will impact the Kiwi market. Check back to The Channel for more updates…