Margins that once averaged 15% for direct partners have shrunk to near 2-3%.
Channel Futures reports that Microsoft is under fire from UK managed service providers who accuse the company of undermining its Cloud Solution Provider program by allowing large Licensing Solution Providers to aggressively undercut smaller rivals.
Margins that once averaged 15% for direct partners have shrunk to near 2-3% as LSPs use scale to offer discounts of 20% or more. The shift follows Microsoft's move to reclaim lucrative enterprise agreement renewals, stripping LSPs of commission revenue and pushing them to target smaller clients.
Analysts suggest the strategy is fuelling consolidation, with Microsoft reshaping its channel into a rigid hierarchy while prioritising revenue growth over partner stability. MSPs argue this "deck-chair shuffling" benefits Microsoft's bottom line but destabilises the ecosystem, leaving smaller providers squeezed out and questioning the tech giant’s long-term commitment to its partner network
Launched in 2014 to "democratise" Microsoft licensing, the program was meant to create pricing parity, but MSPs now say promised protections against margin erosion have collapsed.
Written by
Dan Raywood is a B2B journalist with 25 years of experience, including covering cybersecurity for the past 17 years. He has extensively covered topics from Advanced Persistent Threats and nation-state hackers to major data breaches and regulatory changes.
He has spoken at events including 44CON, Infosecurity Europe, RANT Forum, BSides Scotland, Steelcon and the National Cyber Security Show, and served as editor of SC Media UK, Infosecurity Magazine and IT Security Guru. He was also an analyst with 451 Research and a product marketing lead at Tenable.
