Microsoft Surface as a Service Pricing Terms: Reality Check -

After weeks of speculation by ChannelE2E, Microsoft has confirmed Surface as a Service -- which is somewhat akin to a Device as a Service (DaaS) or Hardware as a Service (HaaS) program that partners can offer to customers. But there are important nuances that partners need to understand. Details about Surface as a Service emerged at Worldwide Partner Conference 2016 (WPC16) today in Toronto. Here's a reality check for partners.

"Today, we announced the ability to sell Surface as a Service," wrote Yusuf Mehdi, corporate VP for Windows and Devices Group at Microsoft. "Now our Cloud Solution Providers (who are also Surface Authorized Distributors) can offer Surface devices through a managed service offering to all of our resellers and customers, alongside managed cloud services, Office 365, Windows 10, and relevant ISV software. This new offering enables flexibility of solutions, faster device refresh and ensures customers can have the latest Surface devices that evolve with the best Windows and Office have to offer. We launched this program with ALSO, a leading CSP out of Europe, and look forward to working with other partners to expand this program globally."

Surface as a Service: Deeper Details

At first glance, that's good news for partners. However, much of the Surface as a Service effort involves IT giants partnering with Microsoft -- including names like CDW, Insight, SHI, Zone, IBM and Booz Allen Hamilton. It's also unclear if or how partners will manage end-customer pricing for Surface as a Service -- though perhaps Microsoft is sharing those details privately with CSPs.

Sources attending WPC16 say Surface as a Service includes the following components -- though we have not confirmed this with Microsoft. The sources say:

Partners don't receive revenue recognition up front. Instead, the partner makes margin on the spread between what they sell Surface as a Service for, and what a leasing company (working via distribution) charges.

At the end of the term the customer owns the hardware. This has some potential downside since the partner can lose control of the customer and/or leave money on the table when recurring hardware revenues expire.

We've reached out to Microsoft to check the accuracy of those claims, and we'll update this article accordingly when we hear back from the company.

Surface as a Service: Hardware Financing Alternatives

A growing list of IT companies and financial firms offer various pay-as-you-go models for hardware. HP Inc., for instance, recently launched their long-rumored Device as a Service (DaaS) offering. And GreatAmerica Financial Services has gained momentum with Hardware as a Rental (HaaR). While HaaS puts the financing risk on the MSP, I believe HaaR shifts the risk onto the financial services provider.

Other players, such as Lenovo, earlier this year told ChannelE2E that they were still taking a "wait and see" approach to more aggressive DaaS and HaaS offerings.