In an effort to expand its presence in "software as a service" (SaaS) offerings, Microsoft will enhance a program that gives ISVs low-cost access to hosted Windows, SQL Server, and other Microsoft products when the ISV hosts its own applications, or contracts with a service provider for hosting. A new program will make it easier for application developers to use the Microsoft platform when offering applications as online services, rather than selling them for use on-premises.

The SaaS Incubation Center Program builds on Microsoft's existing SaaS On-Ramp Program. That program permits developers who build Web-based applications to get discounts on up to eight Windows Server licenses and two per-processor SQL Server licenses on which they can host their own applications. (They can also contract with a hosting service to host their applications, using licenses the developer obtained from Microsoft.) Developers can use the products for 30 days for free, and up to a year at a discounted rate.

However, the SaaS On-Ramp Program has requirements that complicate hosting for application developers, who often have little experience in hosting. Participants in that program must have a special agreement with Microsoft to get the discounted licenses, even if they contract with another company to do the actual hosting, and they must sign a Service Provider's License Agreement with Microsoft.

The SaaS Incubation Center Program removes some of those barriers. Application developers can still get the discounted licenses, but they need to deal only with a Microsoft hosting partner, who provides the hosting services, the discounted licenses, and deployment and consulting services for a single monthly fee. No separate agreement with Microsoft is required.

While the SaaS On-Ramp program was aimed mainly at small ISVs and startups, the SaaS Incubation Center Program is aimed at hosters themselves—in effect, the new program uses hosting companies as a channel for promotion and delivery of the SaaS On-Ramp program. To participate, hosters must do the following:

• Use Microsoft's Windows-based Hosting for Applications, a hosting architecture that employs Windows Server, SQL Server, Operations Manager, and other features, such as scripts for provisioning and managing the hosted service
• Participate in the SaaS On-Ramp program to get the discounted Windows and SQL licenses
• Offer architectural guidance and consulting services for ISVs.

Microsoft signed up eight hosting companies (7global, Affinity, NaviSite, NTT Europe Online, OpSource, Rackspace, Siennax, and Wizmoto) in North America and Europe to launch the new program and expects to sign up additional companies and to expand the program to other regions in the coming year.

The evolution of Microsoft's hosting services, including the launch of the SaaS On-Ramp Program, was covered in "Partner Hosting Opportunities Expanded" on page 32 of the Dec. 2006 Update.