1. Three‑Year Subscription Terms for Key Microsoft 365 and Teams SKUs

Available Products (New SKUs)

• Microsoft 365 E3 without Teams
• Microsoft 365 E5 without Teams
• Microsoft Teams Enterprise standalone
• Microsoft 365 E5 Security
• Microsoft 365 E5 Compliance

End-of-Sale (EOS) Products (Conversion-Only)

• Microsoft 365 E3 with Teams
• Microsoft 365 E5 with Teams

SKU Characteristics

• New SKU IDs under “3 Year SMC SKU”
• Previewed in May 1, 2025 price list; generally available June 1, 2025
• Same price per user/month as 1-year SKUs
• Same partner margins as 1-year SKUs
• No monthly billing; only annual or full upfront (triennial) billing

Minimum Seat Requirement

• 100 seats per SKU (not per tenant or product family)

2. Subscription Term Flexibility for EOS with Conversion SKUs

Term Changes & Retaining Entitlements

For Microsoft 365 and Office 365 Enterprise suites that include Teams and are in an end‑of‑sale lifecycle, partners can now change the subscription term (for example, switching from monthly to annual or from annual to three‑year) without losing the Teams entitlement. Specific product IDs and conversion guidelines are provided to help partners make midterm or renewal adjustments seamlessly.

3. Promotional Discounts (Starting June 9 – December 31, 2025)

Details:

• 10% discount on partner net price for E3 and E5 3-year SKUs
• Valid for up to 2,400 seats per SKU (minimum 100 seats)
• Available only to “new-to-Microsoft 365” customers (never purchased any variant of E3/E5)
• Not applicable to existing customers converting from annual/monthly E3 or E5 SKUs

4. Enhancements to Transitioning Enterprise Agreement (EA) Customers to Microsoft Cloud Solution Provider

Streamlined Process

Microsoft has improved the transition path for Enterprise Agreement customers moving to the Microsoft Customer Agreement (MCA) via CSP. A new guided purchase experience in Partner Center assists partners by surfacing expiring EA subscriptions, retaining Teams entitlements, and aligning new Microsoft Cloud Solution Provider subscriptions with existing agreements.

EA customers transitioning to CSP can:

• Retain Teams entitlements using a guided purchase experience in Partner Center
• Utilize new interface (channel transfers) to manage renewals from EA to CSP

Extended Term Service Clarification

The document explains how partners can manage scenarios where EA customers fall into an “Extended Term” service period, ensuring customers are not billed double during the transition.

• Customers in ETS after EA expiry are invoiced monthly by Microsoft (with a 3% fee)
• Partners must submit “opt-out” forms to avoid double billing
• If 90-day grace period expires without renewal, customer loses visibility and Teams entitlement cannot be preserved

5. Many-to-One Upgrade Automation via AI Assistant (From May 2025)

AI‑Assisted Process

To simplify the many‑to‑one upgrade process (for example, upgrading from an E3 to an E5 subscription), Microsoft is integrating an AI assistant into Partner Center. This new tool automates cancellation and credit processing for duplicate licenses arising from upgrades, reducing the need for lengthy manual support ticket resolutions.

• New support automation in Partner Center for:
  • Cancelling redundant SKUs after upgrade (e.g., E3 → E5)
  • Faster resolution (within 4 days)
• Manual ticket submission still required for unsupported paths or late requests

6. Net Paid Seat Adds (NPSA) Reporting

Performance Tracking

NPSA reporting is being enhanced to allow partners to track net new user additions (including new customers, expansions, and churn) across Microsoft 365 cloud services. This reporting is segmented by customer size and is vital for partners to assess growth and strategize investments for improved revenue performance.

New reporting for partners to assess customer growth and retention:

• Breaks down new, churned, and expanded customers
• Identifies trends and areas of growth

7. New Authorization Requirements for CSP Partners (Starting October 1, 2025)

Updated Criteria

Effective October 1, 2025, CSP partners—including direct bill partners, distributors (formerly indirect providers), and indirect resellers—must meet updated authorization criteria. These include thresholds for trailing 12‑month revenue, mandatory business vetting, security requirements (like completing a Partner Center security score), and specific support plan commitments.

New Authorization Requirements:

• Direct Bill Partners: Must have $1M TTM CSP revenue, pass capability assessment, have Advanced/Premier Support, security score, and at least one Solutions Partner designation.
• Distributors: $30M TTM revenue per region, nomination by Microsoft, security requirements.
• Indirect Resellers: $1,000 minimum TTM revenue, Partner Center security compliance.

Reauthorization Timeline:

• 90/60/30/0-day advance notices before deauthorization
• Deauthorized partners will lose transacting ability and customers will be notified

Reassessment & Notifications

Partners will be periodically reassessed against these criteria (with a defined notification period) to either continue authorizations or risk deauthorization, which may impact their ability to transact for CSP customers.

8. Changes to CSP Incentive Eligibility (FY26 – October 1, 2025)

New Incentive Framework

Alongside the authorization changes, Microsoft will also update the incentive eligibility requirements for FY26. Direct bill partners and indirect resellers will need to meet new revenue thresholds and obtain specific Solutions Partner designations or score points (based on a partner incentives capability score) to earn CSP incentives across Modern Work, Security, Azure, and Business Applications solution areas.

Monitoring and Adjustments

The eligibility for incentives will be actively monitored with monthly checks and strict enforcement rules to prevent partner‑to‑partner transfer abuse among CSP entities.

CSP Incentives Changes

• Direct Bill Partners:
  • Must meet $1M TTM revenue and hold a Solutions Partner designation
• Indirect Resellers:
  • $25,000 TTM revenue + 25 Partner Incentive Capability Score points or a Solutions Partner designation
• No changes for Distributors
• Partner-to-partner transfers (COCP) excluded from incentive eligibility

Key Takeaways for CSP Partners

• Sales Strategy: Focus on upselling from O365 to Microsoft 365, E3 to E5, and converting Enterprise Agreement customers
• Revenue Planning: Use the 10% 3-year promotion to secure long-term deals
• Eligibility: Strict enforcement of new-to-offer and seat count rules—no refunds for early purchases before promo start
• Support Automation: Use Partner Center AI assistant to streamline post-upgrade support
• Security Compliance: All CSPs must comply with new Partner Center security scoring

Frequently Asked Questions (FAQ)

Can customers migrate from EA to CSP without disruption?

Yes. Microsoft now supports structured transitions from EA to CSP, including support for co-termination of agreements, license mapping, and maintaining pricing tiers where applicable.

Is pricing under the new 3-year CSP terms different from EA pricing?

While pricing structures are similar, CSP does not always provide the same volume-based discounts as EA. However, CSP offers more flexibility and often lower administrative overhead.

Do the new CSP terms support true-ups like EA?

Not in the same way. CSP is more consumption-driven and typically operates with upfront or monthly billing based on actual use. Customers must manage growth proactively, as true-up options are limited compared to EA.

Are all Microsoft 365 and Azure services available in CSP now?

Nearly all are, but there may still be exceptions. The updated product catalog continues to expand in CSP, particularly for enterprise and public sector customers.