Bonus Post: Kaseya Bids to Shake Up MSP Economics with Kaseya 365

Editor’s note: Channelholic usually appears in your inbox on Fridays, and will again this week. But given the extraordinary interest in the mystery announcement Kaseya has long been promising to make today at its Kaseya Connect Global event and Channelholic’s early opportunity to discuss that news under embargo with Kaseya CEO Fred Voccola yesterday, we’re publishing this part of our coverage from the conference now. The rest of our writeup from the show, including thoughts on Kaseya’s “Partner First Pledge,” evolving automation strategy, and more, will appear in our usual post at the end of the week.

It’s pretty much a given that rumors will swirl in the weeks before a Kaseya conference. Even by that standard, though, there was a lot of speculation circulating in the runup to this week’s Kaseya Connect Global conference in Las Vegas.

Hardly a surprise, though, given that Kaseya has been dropping hints that it had something huge coming since its DattoCon event last October, and dropping them even more loudly this month.

Most of the guesses about what’s coming (like, say, Kaseya buying ConnectWise) were always a bit…unlikely. But one persistent rumor struck me as more than a little plausible. Kaseya, it went, is introducing a Microsoft Office-like subscription combining multiple products from its expansive portfolio of management, security, and backup products. That, if true, would make perfect strategic sense for a company long committed to cross-selling integrated solutions at prices too low for most competitors to match or most MSPs to ignore.

Well, guess what? It is true, and the subscription in question even bears the name rumor mongers often attached to it: Kaseya 365.

Interestingly, though, K365 (as we’ll all be calling it within days) is more than just an option for buying a bunch of Kaseya products together on one bill. Though not quite a new solution, it’s more than just a bundle of existing ones too. It’s an all-new SKU that draws on RMM, patch management, antivirus, EDR, MDR, ransomware rollback, and endpoint backup features found in multiple Kaseya offerings and melds them into a single, unified platform.

“It allows you to run all of your backup out of your RMM,” Kaseya CEO Fred Voccola (pictured) told Channelholic yesterday by way of example. “But now backup and RMM are part of the same subscription and they’re fully integrated from the same interface and the same place.”

Oh, and by the way, the whole thing sells for a flat $3.99 per endpoint per month, including 5 TB of backup storage. Unless you want the Express edition, which excludes MDR and costs $1.75 an endpoint.


Those prices, more than anything, are why Kaseya considers Kaseya 365 such a big deal. “We’ve changed the unit economics of the MSP industry,” Voccola says.

$3.99 an endpoint is so low, Kaseya contends, that the average K365 subscriber will experience an immediate 30-50% profitability bump on each endpoint they manage despite wrapping more services around that device than they probably do today.

And more security services in particular. “I talk to MSPs that can’t put EDR on their customer environments because the customer won’t pay for it,” Voccola says. “That’s insane.” It’s also the kind of conversation a Kaseya 365 subscriber doesn’t need to engage in anymore, he adds.

“Even if that stubborn customer doesn’t want to pay for it, the MSP can provide that capability and still make the margins that they need to make to run their business,” Voccola says. “We’re allowing every single small to midsize business in the world to have the proper full protection that they need even if they can’t afford to do it.”

Everything said so far, moreover, assumes you leave your rates unchanged after subscribing to Kaseya 365. You can also cut your rates, though, and put competitors without K365 in a difficult spot.

“If someone’s not using Kaseya 365, I don’t know how they’re going to survive. I really don’t,” Voccola says. “You can offer a much more comprehensive solution to your competitors’ customers at a lower price and make the same profit.”

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It’s all about Office, but not the one you think

Needless to say, the same logic applies to Kaseya itself in relation to its competitors. Indeed, K365 is pretty clearly a bid to exchange short-term profit for long-term share. That can be a rewarding tradeoff for a company with sufficient financial heft, as Microsoft learned back in 1990 when it began selling Word, Excel, and PowerPoint together at a steep discount as “The Microsoft Office for Windows.” And despite the “365” in its name, Kaseya 365’s inspiration is Office more than it is Office 365.

Voccola was an intern at Lockheed back when those early versions of Office began shipping. “I operated the only spreadsheet in the finance department. It was Lotus,” he recalls. “Why weren’t there more copies of Lotus on the other remaining machines? It was expensive and people didn’t feel like they needed it.”

Two years later, everything had changed. “Every finance person had Excel, even the ones that used Excel five minutes a day for a little task. Why? Microsoft made it affordable, accessible, integrated, and available. We’re doing the same thing.”

And putting the same tools that managed service giants use within reach of much smaller, less profitable MSPs with more humble toolsets in the process. “I think it opens up a monster market,” Voccola says.


Of course, the Microsoft Office play works best against makers of point solutions, like Lotus, so it’s vendors that specialize in parts of the K365 stack, like security or backup, that will have to think hardest about what an aggressively priced platform that includes perfectly acceptable alternatives to their products means for them going forward. Suite makers like ConnectWise, N-able, NinjaOne, and Syncro, on the other hand, will just have the aggressive pricing part of the equation to ponder.

Whether Kaseya 365 is the right solution to the right problem at the right time is a separate question for Kaseya itself to ponder though. The platform has a distinctly endpoint-first tilt at a time when everything that matters to SMBs is increasingly in the cloud. It includes endpoint backup, for example, but not cloud-to-cloud backup as far as I can determine, even though Kaseya offers cloud-to-cloud backup solutions. Hard to tell if the platform’s RMM component includes the Microsoft 365 management features that Kaseya’s Datto RMM solution gained last year either.

Which means Kaseya 365 could end up being tomorrow’s answer to yesterday’s challenge, not that there’s anything to stop Kaseya from continuing to introduce solutions for the other, arguably more strategic, parts of an end user’s estate.

In the meantime, economics alone won’t be enough to make some MSPs comfortable placing big bets on Kaseya, which is why the company also announced a new “Partner First Pledge” at the show today. More on that this Friday.