Microsoft’s latest decision to stop pay-as-you-go model in Azure: Master stroke or a big mistake?

I almost didn’t believe what I was reading. Starting soon, new Azure customers will not be able to simply choose pay-as-you-go model. They will have to select one of the Microsoft Cloud Partners, and get the service from them. Pay-as-you-go is so popular that International Data Corporation (IDC) mentions it as a core component of a cloud platform. What could be the motivation of Microsoft behind this decision? Below are some of the pros and cons of this approach I could think of. Feel free to let me know in the comments if you agree or disagree, or if you have some of your own opinions.

Pros of removing pay-as-you-go option

1. Many customers lack the ability to understand cloud pricing model

Most customers that buy pay-as-you-go option lack the skills to understand the nuances of the utility billing. A vast majority of people that use this model are unable to fully understand their bill. Thus, cloud cost management is one of the most prolific areas for cloud start-ups. By making new customers choose a cloud service provider, Azure is making sure the new Azure customers get billing management by the vendor.

2. Will help new customers leverage cloud better

Most new customers that start using a cloud provider like Azure or AWS only use a handful of services. When we get new consulting clients at CloudThat, we usually see that they use only the basic services like VNet, Storage and Virtual Machines (EC2 instances in AWS); Thus, by tagging a consulting company with each new customer, Microsoft is making sure all new customers can get full benefit of all new services in Azure from the consulting company.

3. Energize the consulting partners

This will enthuse the Azure Cloud Solution providing companies, like us at CloudThat. All of a sudden, you have a hoard of new clients that you get to service. Even if majority of them are smaller clients, we can have the ability to nurture and grow the business.

4. Will drastically increase interest in becoming Azure Consulting Partner

You can expect that many AWS Consulting Partners will overnight line up to become Azure Consulting Partners too. The partner portfolio of Azure is bound to grow rapidly.

5. Positions Microsoft as a true partner-driven company

The biggest pro in my opinion is that Microsoft truly proves that it’s a partner driven company. Partners will get a renewed sense of this commitment. AWS on the other hand, has their own divisions that provide consulting, training and it also injects a lot of successful partner products into their own features, making those partners redundant. Thus, they compete with their partners head-on in almost all areas. I think many AWS partners will see this and might feel that AWS is not doing justice to their partnership.

Cons of removing pay-as-you-go option

1. Azure customers might feel forced

Many customers like the ease of pay-as-you-go model. This is very widely accepted in the ecosystem now. Will customer accept the added nuance of having to choose a consulting company serve them? There could be a feeling of being forced, and nobody likes to be forced.

2. Cost for new customers might increase

New customers might see their cost to use Azure increase, as they might choose the option where the consulting company is going to be providing them value added services with their Azure subscription. When they compare with pay-as-you-go bills, they might find it much higher, and might not like it.

3. The tech community might not like it

Individual Developers and Architects who use Azure for educating themselves, or for freelance work, might not like having to go through an Azure Consulting Partner. This might hurt the ecosystem of developers and IT enthusiasts. I am sure Microsoft will come up with a special plan for tech community though. They already give $25 free each month for anyone with Visual Studio online.

4. Flood of clients for Azure Consulting Partners

It could be that the partners are inundated by the new customers, much of whom will be individuals or small businesses. They might not be able to serve all the customers, and that might give bad experience to new Azure users.

What are your thoughts on this? Do you think this is a master stroke or a big mistake? Feel free to leave your thoughts below. If you have any query about Cloud consulting, feel free to write to me at bhavesh@cloudthat.com