Microsoft (NASDAQ: MSFT) has launched new Office 365 cloud services for business. The news, which was expected, shows real progress as Microsoft seeks to promote the Office 365 cloud platform to VARs, MSPs and cloud integrators. But the updates don't quite hit a home run for all channel partners. Here's why.

The new Office 365 includes Exchange Online, SharePoint Online, Lync Online and a range of additional services depending on which SKU partners or customers select.

Many partners are keeping an eye on Office 365 Open -- a program that allows partners to manage end-customer billing and pricing. That's a key requirement some partners have demanded ever since the original Office 365 launched in mid-2011. Rivals like Google Apps have long allowed partners to manage end-customer billing.

The Fine Print

To leverage the Office 365 Open capability, I believe partners need to focus on Office 365 Midsize Business edition. It's designed for 10 to 250 employees and it sounds feature-packed for partners. This service includes Office 365 ProPlus, Active Directory integration, a web-based administration console and business hours phone support. Pricing is $180 per user for an annual subscription (that an average of $15 per user per month). 

But did you notice that 250 user limit? Jump to Microsoft's enterprise Office 365 offerings for 251 or more users, and I don't believe the Open billing capabilities are available to partners. That's somewhat disappointing to me -- though I concede the vast majority of Office 365 partners focus on that 250-or-less market segment.

On the lower-end, Microsoft introduced Office 365 Small Business Premium. It's designed for small businesses with 1 to 10 employees. Pricing is $150 per user for an annual subscription (equal to $12.50 per user per month). But I believe it lacks the mid-market edition's Active Directory capabilities.

The Fine Print Part II

I believe Microsoft also requires a minimum one-year annual commitment to Office 365, though I need to double-check that. In the age of cloud computing a one-year commitment, if true, isn't good business. Cloud and SaaS companies must earn their customer retention every month, and be willing to let customers walk away at any time if they choose to do so. Prove your value and customers will stay -- with no need to throw in one-year commitments.

More Progress

I've got a lot more to say on this topic. Stay tuned for another blog today, including some great perspectives from Cindy Bates, VP of US small and medium sized businesses at Microsoft. I respect the progress Bates, Channel Chief Jon Roskill and other Office 365 leaders have delivered to partners in the past year. Roskill also shared some thoughts with me over email, which I will include in my next blog.

Assuming the new Office 365 updates work as advertised, today's launch represents serious progress for Microsoft and its partners. And a growing number of partners are embracing Office 365. But the journey isn't done.