MSP Platform Price War Looming LPI Level Platforms puts pressure on rivals with aggressively priced MSP platform update By Dan Neel, CRN 2:06 PM EST Fri. Feb. 10, 2006 From the February 13, 2006 CRN A price war in the booming market for MSP platforms is set to be waged when LPI Level Platforms releases a new version of its software at a dramatically lower price on Feb. 28. The arrival of version 5.0 of LPI’s Managed Workplace at price points that start as low as $15 per month per site to remotely monitor and manage customer environments with up to 10 devices or $25 per site per month for up to 250 devices is intended to fire a shot across the bow of MSP platform competitors such as Cittio, Kaseya, N-able Technologies and Silverback Technologies, said LPI CEO Peter Sandiford. LPI’s fortified platform will ship at an even lower entry-level price than the vendor’s long-standing $60 per month per site subscription model for an unlimited number of devices, which will put rivals on the defensive, VARs said. Version 5.0’s price point should put pressure on LPI’s rivals to counter with price reductions, said Dean Bickmore, vice president of sales at Silvertree Technology, Tulsa, Okla. “This is going to have a a big effect.” Bickmore is in the process of adding managed services using LPI and said he chose the vendor less for price and more for the ease with which his company can work with LPI. LPI’S Sandiford boasted that version 5.0 does “literally everything that a VAR could need to monitor and manage all their customers—everything they need to provide a full managed services offering.” Version 5.0 adds features such as secure, point-and-click remote control of any PC or server, patch management for all Windows devices, policy-based alerts, and Web application monitoring, Sandiford said. VoIP management, network asset reporting, and a trouble-ticketing system that integrates with popular CRM systems are also part of 5.0, he said. “We are kind of astounded by [the pricing],” said Mike Cullen, vice president of sales at N-able, Ottawa. “It’s a surprising move in a hot market.” LPI is making a major mistake by continuing to lower its price as it improves its platform, Cullen said. “As [LPI] goes down in price, its perceived value is going to be less and less.” Still, N-able in September launched its MSP Startup Program, which is somewhat similar to LPI’s traditional model. Like LPI, the N-able program is a hosted service at a low cost: $99 per month for a full-featured MSP offering. From there, a more comprehensive hosted MSP service called OnDemand is also available from N-able, starting at about $500. N-able’s full-scale monitoring platform can be bought outright starting at about $10,000. Jamie Lerner, CEO of MSP platform vendor Cittio, San Francisco, countered LPI’s discounting strategy by saying any low-cost subscription MSP model—be it LPI’s or N-able’s—is misleading. “The subscription product is not as inexpensive as you may be led to believe, because the mode is a perpetual rental model. You’re always going to be paying,” he said. Cittio can help engineer financing that lets VARs own the vendor’s MSP platform in 36 months, at costs that range between $9 and $12 per monitored node per month, Lerner said. “And you own it.” Jim Hare, vice president of worldwide sales at Silverback, Billerica, Mass., was defiant of LPI’s discounting strategy. “We have consistently raised our price,” said Hare, who explained that Silverback’s current pricing can range from about $10,000 to $76,500 for the vendor’s Business Builder MSP program. Several of Silverback’s VAR customers turned to the vendor after outgrowing the LPI platform, Hare said. “My partners pay less per device than any of my competitors. My guys make more money,” he said. As for LPI’s lowered pricing, he said, “You can spend $10 and make $100, but wouldn’t you rather spend $100 and make $1,000?” N-able defends both its low-cost and higher-cost offerings with a belief that solution providers must undergo a cultural change from project-based work to a reoccurring revenue model to succeed as MSPs. “If we didn’t provide the business transformation services we do, probably 80 percent of our partners would fail,” Cullen said. A former N-able customer who now runs LPI’s MSP platform takes issue with N-able’s approach, however. David Dadian, CEO of Powersolution.com, an $1.2 million MSP in Ho-Ho-Kus, N.J., said he is essentially using the profit realized from running LPI’s MSP platform to pay off a $15,000 investment made in N-able in 2004 that has collected dust and never showed its own ROI. If the business transformation efforts employed by N-able contribute to the higher cost of their MSP platform, N-able’s price is too high, Dadian said. “They weren’t going to come in and turn my business upside down. I didn’t need that,” he said. With LPI, Dadian has added nearly 20 MSP customers with seat counts as high as 100. Managed services are expected to account for 70 percent of his business by the end of this year. Powersolution.com may spin off a separate MSP division due to the success, he said. LPI rival Kaseya, San Francisco, declined to comment on LPI’s discounting strategy. But Shawn Masterson, vice president of Excel Computer, a 16-year-old solution provider and second-year MSP in Bangor, Maine, said the company officially cut ties with LPI last week after signing on as a Kaseya customer. Masterson was one of the beta testers of LPI’s Managed Workplace 5.0 and said from what he has seen, LPI may be trying to cram too much functionality into its product too quickly, opening the door for glitches. “Over the course of the past year, it seems [LPI] has been growing a little too fast,” Masterson said. LPI’s low price and subscription model “intrigued us in the beginning,” he said, but rapid, ongoing improvements to the vendor’s platform negatively affected its reliability and caused Excel’s staff too many headaches. Relentless add-ons to version 5.0 of LPI’s Managed Workplace resulted in the delay of the product launch, which was scheduled for last November, he said. Kaseya was a higher up-front cost, but similar to Cittio, Kaseya worked to spread the cost of the MSP platform over long-term payments, Masterson said. But what LPI seeks to accomplish with 5.0 could work, Masterson said, who added that LPI has fantastic customer support.