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Microsoft's Bleak Black Friday

Black Friday does not appear to have been kind to Microsoft, which is banking on robust sales of its new Surface RT, the hybrid tablet-PC launched last month, as well as devices offered by its OEM partners running Windows 8.

Well-respected Piper Jaffray senior research analyst Gene Munster and his team took to their annual ritual of hitting the Mall of America in Minneapolis, where they analyzed traffic at the Apple Store for eight hours for the fifth consecutive Black Friday. This year, the team also spent two hours observing traffic and buying patterns at the new Microsoft Store, which just happened to be across from the Apple Store.

Based on their time spent in both stores, here's what they observed:

  • Average traffic at the Microsoft Store was 47 percent less than the Apple Store.

  • On average, 3.5 items were purchased per hour at the Microsoft Store. However, all but two were Xbox gaming systems, compared with 17.2 items at the Apple Store.

  • No Surfaces were purchased during the two hours the analysts spent at the Microsoft Store.

  • The Apple store sold 11 iPads per hour (both the mini and full-sized iPad) compared with 14.8 last year on Black Friday, though the analysts believe the lack of supply of iPad minis may have contributed to the decline in sales.

  • Traffic at the Apple Store was up 31 percent over last year.

  • The projected growth for iPad sales year-to-year is 62 percent, with more sales moving online. 

Piper Jaffray wasn't the only one to report bad Black Friday news for the Surface RT and Windows 8. IBM's annual Digital Analytics Benchmark Black Friday Report found that 88.3 percent of all tablet and smartphone traffic was related to iPads. Granted, that doesn't necessarily reveal how much of that traffic resulted in purchases, but the item that came in second was the Barnes & Noble Nook at a mere 3.1 percent, followed by the Amazon Kindle at 2.4 percent and the Samsung Galaxy with just 1.8 percent of traffic (all based on some derivative of Google's Android). I was unable to ascertain from IBM's report whether it even measured the Surface or Windows 8-based systems; an e-mail and phone call to a spokesman went unanswered.

Store
A moderate crowd of shoppers at Roosevelt Field mall in Garden City, N.Y. gathered at Microsoft's holiday pop-up store examining the Surface RT. (Credit: Jeffrey Schwartz)

I didn't spend Black Friday conducting any deep analysis but I did stop in at my local Best Buy, which of course doesn't sell the Surface but did have various Windows 8 systems on display. Some of them, I was dismayed to see, weren't touch-enabled. The Windows 8 machines were overshadowed by Apple's one-day promotion in which the company was discounting its full-sized iPad, not the mini.

Days earlier, I was at the Roosevelt Field mall in Garden City, N.Y., where I visited one of Microsoft's holiday pop-up stores. Unlike it's permanent retail stores, this pop-up store was basically a stand which showcased the Surface and gave a small but barely noticeable amount of real-estate to a few Windows 8 PCs offered by OEMs.

The pop-up store was well-staffed and there were a number of people looking at the Surfaces. The rep behind the counter said the Surface machines were selling well but offered no specifics (however, what sales guy is going to tell a prospective customer that something isn't selling well?). I then strolled over to the Apple Store, which was quite jammed.

One bad day doesn't necessarily spell doom for the Surface and Windows 8 but it is the latest discouraging data point showing the new OS is going slow out of the gate. Just before the Thanksgiving holiday, Forrester Research issued a report concluding Windows 8 appears to be "dead on arrival" in the enterprise.

I got my own dose of that possible reality last month, when I was on a panel called Advances in Mobile Devices: Technologies, Products and Strategies at the Interop 2012 show in New York, where I polled the audience of enterprise IT pros about their support of tablets. I learned that, indeed, most were supporting iPads -- but hardly any had plans for Windows 8-based devices.

Is there any hope for Surface and Windows 8? In a September BusinessWeek article titled "Microsoft's Frantic Race for Third Place," which explored the company's other daunting challenge of making a dent in the smartphone market with Windows Phone 8, Microsoft senior marketing manager Greg Sullivan said, "Our road map for Windows Phone is measured in years, not months." Since Windows Phone 8 is tied to the fortunes of Windows 8, it raises the question: Does Microsoft have years to be successful? The article, which took a mostly pessimistic view toward the prospects for Windows Phone (though it did praise the unique interface), did conclude with some hope. It noted that in 2001, everyone gave Microsoft's Xbox little change of unseating Sony and Nintendo in the gaming market, while today it has a dominant 47 percent share.

Do you think Windows 8, Surface and Windows Phone will share a similar come-from-behind fate over time? Feel free to comment below, or drop me a line at jschwartz@1105media.com.

Posted by Jeffrey Schwartz on November 26, 2012 at 11:59 AM11 comments


Microsoft Partner Goes All-In on Windows 8

Much of the attention from last week's launch of Windows 8 and hybrid PC devices based on Windows RT -- including the new Surface from Microsoft -- has focused on trying to stop consumers from defecting from Microsoft's OS platform to the rapidly growing iPad and devices based on Google Android.

But just as important to Microsoft, if not more, is keeping business users plugged into Windows. It appears interest among business users in Windows 8/RT is lukewarm right now. At last week's launch, Microsoft CEO Steve Ballmer gave a brief plug to business users, but that was about it: "Our enterprise customers will love the new Windows," he said.

I spoke to one Microsoft Gold partner last week who said he is seeing interest from enterprise customers in the new OS: En Pointe Technologies, a global integrator focused on enterprise customers based in Los Angeles, with 500 employees nationwide and 1,200 globally.

En Pointe is involved in about 20 proofs-of-concept for enterprise customers. Peter Renner, director of Microsoft professional services at the Los Angeles-based partner, told me most of them are customers that still have Windows XP and face the impending 2014 end-of-life deadline imposed by Microsoft, when the company will no longer support the aging desktop OS. Two are customers that already have Windows 7 but want to be on the so-called cutting edge, Renner explained. For competitive reasons, he declined to identify them -- understandable, since these are all deals still in progress.

While there is little margin in selling Windows or PCs, Renner said a lot of customers that deploy PCs or tablets with Windows 8/RT are looking for professional services in the form of deployment, administration and training.

"Right now, customers have been asking for limited pilots and for application remediation. In other words, Windows XP or Windows 7 applications working in Windows 8 and how the Metro interface will work with their applications like SAP," Renner said. The first users in those organizations are high-level executives, he added.

Besides the new modern touch-oriented interface (which Microsoft called "Metro" prior to the release), there are other reasons enterprises are interested in Windows 8, Renner said. One is improvements to security with features and better support for remote users. One feature that many customers have found appealing, Renner said, is Windows To Go, which lets organizations give users a systems image on a USB stick and run it on any PC without concern that data will leave the flash drive.

"There are a lot of customers looking at how to manage the tele-users," Renner said.

En Pointe has relationships with key PC vendors, including leaders Dell, Hewlett-Packard and Lenovo, and there are various incentive programs in place. Renner said he is also looking forward to seeing Microsoft's new Surface, also launched last week (see RCP Editor in Chief Scott Bekker's first impressions of the new device). Though it remains to be seen if Microsoft will let En Pointe sell the Surface, Renner is prepared to support the devices regardless of how customers procure them.

All said, Renner has geared up to promote and incentivize enterprise customers to deploy Windows 8/RT-based systems. "We've taken a proactive approach to provide a Windows 8 accelerator program for our customers," he said. "We've provided hardware incentives and professional services, and our resources have been consumed pretty heavily because of that. I am hiring more people that focus on Windows imaging and Systems Center deployment to meet that demand."

See Also:

Posted by Jeffrey Schwartz on October 29, 2012 at 11:59 AM0 comments


Revisiting the Microsoft Store To Spend Time with Surface

Living in suburban New York City, I decided not to hang out in town until midnight on the day of the launch of Windows 8 and the Windows RT-based Surface.

Instead, I stopped by the Microsoft Store 30 miles away at Long Island's Walt Whitman Mall, in Huntington Station, N.Y., which opened last month. I was there a few days earlier, as well, so I have an idea of how much floor-space was reallocated to the Surface.

A bird's-eye view suggests about one-third of the real estate dedicated to PCs feature the new Surface, Microsoft's own new device, which looks and functions much differently than any other tablet or PC on the market so far (see Redmond Channel Partner Editor in Chief Scott Bekker's review after spending about an hour with the new device at the launch.)

There was no midnight madness out here in the suburbs, though a sales rep told me that as of 5 p.m. Friday, the store had sold 200 devices. It wasn't sold out but the sales rep said at that pace, they would need more units to get through the weekend -- though I don't think he took into consideration that people would be hunkering down in preparation for Hurricane Sandy, aka "Frankenstorm."

Nevertheless, like Bekker, I too spent some time with the machine both at the launch and during my subsequent visit to the Microsoft Store on Friday. While I love the look and feel of the very capable Surface, its price is slightly higher than I'd like to see. With the optional keyboards, you're looking at a $620 or $630 investment before taxes. I shared my views with Forrester Research analyst Frank Gillett, who made a good counterpoint when we met up during the launch event in New York.

"They're not going after the low-end. There's no flight to the bottom. It's very much a premium market," Gillett said. "Only Android is doing that. That said, I think the iPad mini is going to have much bigger holiday sales than these other devices."

I believe over time, Microsoft will offer various iterations of the Surface at various price points and configurations. The Surface Pro, due out in January, will include the full Windows 8. The current offering only runs Windows RT, meaning it can't run older Windows apps.

If you're a Microsoft partner and have access to a local Microsoft Store, you should stop by and check out the Surface and form your own opinion. Even better, get to know the folks at the store. Equipped with private rooms, they're a good venue to invite your business customers for seminars and other events.

See Also:

Posted by Jeffrey Schwartz on October 29, 2012 at 11:59 AM0 comments


Windows 8 Looms Large on Eve of Microsoft Earnings Release

As Microsoft braces to disclose earnings tomorrow for its fiscal quarter ended Sept. 30, analysts this week have lowered expectations with some fearing the software giant could miss consensus estimates that have already dropped.

Analysts are forecasting a year-over-year revenue decline of 5.3 percent totaling $16.45 billion, Forbes reported Monday (citing Zacks Investment Research), while earnings are expected to drop 16.2 percent or 57 cents per share, down from 68 cents per share last year. Prior to lowering expectations, analysts were forecasting 60 cents a share.

Longtime Microsoft follower Rick Sherlund, an analyst at Nomura Securities, told CNBC Monday that he believes revenues could be off by 6 to 7 percent, though the company could report a 1 percent increase based on deferred Windows 8 revenue.

The culprit is worse-than-expected PC sales, which plummeted 8.6 percent in the third quarter, according to IDC, a much sharper drop than the 3.8 percent decline the market research firm had predicted in August. Looming large over Microsoft and its partner ecosystem is next week's launch of Windows 8.

Yet despite short-term pessimism and some wondering if Windows 8 is doomed, Sherlund believes the coming quarter and perhaps the one after that will  be rough ones for Microsoft, but ultimately Windows 8 will take off next year once Office 2013 ships. "There's a whole new re-platforming going on that will deliver a lot more functionality over the next six-to-12 months," Sherlund said. While Windows 8 and the new Modern UI will require a learning curve, Sherlund noted that the Apple iPad did, too.

"There is some disruption coming. People are going to have to spend a little time learning it," Sherlund said. "As you begin to see the TV advertising, it could be fairly seductive when you see the touch-based devices and the form factors are fairly creative. Ultimately, the story revolves around more functionality for these mobile form factors."

Sherlund expects Microsoft will see resistance from users who won't take an initial liking to the new Window 8 Modern UI (formerly known as Metro), much like the backlash over the Office Ribbon introduced in Office 2007. "People hated it. Now it's one of the most loved things in Office," he said "People hate change on a work utility like this."

While Sherlund has a point, it bears noting that some people still despise the Ribbon in Office and the new Windows experience is a much more jarring change than the Ribbon. Nevertheless, he warned the coming quarter will be challenging for Microsoft. "I think it's going to be a slow ramp given the volumes we are likely to see in Q4."

What are your predictions about how users will react to Windows 8? Drop me a line at jschwartz@1105media.com or leave a comment below.

Posted by Jeffrey Schwartz on October 17, 2012 at 11:59 AM3 comments


Facing an Audience of Windows 8/RT Skeptics

Just three weeks from today, Microsoft will launch Windows 8 and its Windows RT-based Surface RT tablets at an event set to take place in New York. While this will kick off a new era for Windows and its partner ecosystem, plenty in the IT community are cynical about Microsoft's prospects.

I stepped into a lion's den of them Thursday when I sat on a panel called Advances in Mobile Devices: Technologies, Products and Strategies at the Interop 2012 show in New York. I asked the audience of about 50 enterprise IT pros how many have iPads in their organizations; about three-quarters raised their hands. I then asked how many plan to buy tablets running Windows 8 or Windows RT and, alas, only two or three people raised their hands.

Panelists
Interop 2012 panelists. Standing: Michael Dortch (moderator). Sitting (L-R): Brian Katz, Phillipe Winthrop, Jeffrey Schwartz

Does that mean new Windows 8 and Windows RT-based tablets including Surface RT are DOA? It should come as little surprise that this is a question that's been on my mind for some time. While it's clear Windows will never experience the dominance it once had, its success or lack thereof will take years to play out.

Take the example of my co-panelist, Brian Katz, head of mobility engineering at the global pharmaceutical giant Sanofi, which has 110,000 employees. Like many large enterprises, one strike against any short-term uptake for Windows 8-based PCs or convertibles or Surface RTs is the fact that the company is in the latter stages of a Windows 7 rollout. Though Katz says he does get requests for full-blown Windows tablets, it's less expensive to give an employee an iPad and a lower-cost PC. What will it take for Sanofi to get excited about Windows 8 and RT?

"I need them to be priced significantly less than an iPad," Katz said during the one-hour session, emphasizing he'll be disappointed if the keyboard costs extra. "The second piece is I need to be able to manage it with whatever management system my enterprise has. Microsoft has said, 'Hey, you use [Windows] InTune.' Let's be clear, the enterprise part of me wants it to succeed."

Katz is well aware that Windows RT and Surface RT tablets won't connect to Active Directory domains and can't be managed by System Center, and that's an issue for him and most decision makers at large enterprises. Full-blown Windows 8 tablets will support both the traditional Windows desktop interface and the new Modern UI (formerly known as "Metro"). Another make-or-break factor in the equation Katz and others on the panel said is a strong ecosystem of apps that support the Modern UI.

Also making it hard to predict whether enterprises will embrace Windows 8 and Windows RT is the so-called "consumerization of IT" and the fact that end users, not technology decision makers, have a greater influence than ever over what they will use to do their jobs. And there is less concern about operating systems.

"Users don't care," said the panel's moderator Michael Dortch, a longtime industry analyst who is now senior product marketing manager at ServiceNow. "All they care about is applications and getting their jobs done. There may be a set of applications that dominate the ecosystem but no one cares what platforms the run on." Katz agreed, saying the only time it matters is when the key applications a user needs comes with the operating system.

With just three weeks until launch, little is known about what's in store for Windows RT and the Surface RT systems. Microsoft has not disclosed detailed specs other than the fact that they're based on ARM's System-on-Chip (SoC) architecture.

"Microsoft has been very hush-hush in what they're providing to us vendors," said panelist Phillipe Winthrop, founder of the Enterprise Mobility Forum, who recently joined mobile device management vendor Veliq.

"What's going to happen?" Winthrop asked in reference to demand for Windows 8/RT. "No one knows."

What's your prediction? Leave a comment below or drop me a line at jschwartz@1105media.com.

Posted by Jeffrey Schwartz on October 05, 2012 at 11:59 AM2 comments


What Can the Microsoft Store Do for You?

I've never attended the grand opening of a store and I was intent to keep it that way until I was invited to the ribbon-cutting ceremony for the opening of the Microsoft Store in Huntington Station, N.Y. Given that I live 15 minutes from the site of the new store at the Walt Whitman Mall, I wanted to take a look at how Microsoft's retail push might boost its profile among consumers and what impact it will have on partners.

First of all, the store I visited was quite slick. Huge video monitors encircle the wall that encompasses the entire internal perimeter of the store with panoramic, highly polished videos promoting various Microsoft offerings including Xbox and Office. Not surprisingly, every type of PC form factor was on display, from desktops to low-cost notebooks (most in the $699 range), to Ultrabooks and, of course, touch-based tablets (though only a handful at the moment).

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Inside the Microsoft Store at Huntington Station. Credit: Jeffrey Schwartz

Those looking for the latest PCs and tablets will surely find them at the Microsoft Stores and while prices will be competitive, I saw nothing to suggest that the nearby Best Buy or Staples will be left in the cold. In fact, I did a quick price check of a few machines on display at the Microsoft Store and compared it to Best Buy's online prices (which typically are the same as their in-store prices):

  • A Samsung Series 7 tablet powered by an Intel Core i5 processor, with a 128 GB solid state drive (SSD), 4 GB of RAM running Windows Pro 7 (upgradeable to Windows 8) costs $1,200 at the Microsoft Store. A search of Best Buy listed a similar system for $1,124.98 today with the most notable difference being the listed system only has a 64 GB SSD drive.

  • A Dell XPS PC with a 1 terabyte drive and 8 GB of RAM and a 27-inch display cost $1,499 at the Microsoft Store but was on sale at Best Buy for $1,049, though it only had 6 GB of RAM.

  • And a similarly configured Lenovo A720 at the Microsoft Store is priced at $1,699 with a 750 GB hard drive, versus $1,329 at Best Buy for a system with a 500 GB drive.

I should point out I didn't do a feature-by-feature comparison, but the point is Microsoft doesn't appear to be using its store to undercut other retail channels. Nevertheless, the stores will probably highlight the latest products available from Microsoft's OEM partners.

Of course, Xbox fans will delight in seeing the latest hardware and demos and there is a nice selection of peripherals for the gaming system as well as for PCs. A whole section is devoted to input devices ranging from game controllers to mice, keyboards and flash drives.

In addition to hardware and software, Microsoft is using its stores to sell services to individuals and small businesses. Microsoft Assure is the two-year protection plan the company is pushing with the systems it sells typically for around $169 or $199 depending on the hardware (some plans may cost more). The stores offer a variety of other services including Premium Tech support plans, Extended Diagnostics, backup, tune-ups, virus and spyware removal and, for small businesses, Microsoft Signature Professional. Priced at $399 for up to five PCs (each additional system is $79), Microsoft Signature Professional includes ongoing support, setup and training.

Microsoft is hoping to use the stores to engage its partners, as well. Each store will recommend partners to address advanced services such as setting up a storage network or deploying a server or providing Office 365 implementations. Microsoft is still addressing the specifics of how it will select partners. I was told that they can use a small theater in the back of the store to give presentations.

In a small corner were some Windows Phones from Nokia, HTC and Samsung but it bears noting that none of those on display will be upgradeable to Windows Phone 8. While I realize Microsoft has to keep promoting Windows Phone, it concerns me that the stores are selling phones that are going to become obsolete in the not-too-distant future. I think the stores need to make it clear when they buy these phones that they won't be upgradeable to Windows Phone 8.

The Microsoft Store is very similar in concept to the Apple Store, which set the bar not only for selling technology but is changing the dynamics of all retailing. The BYOD trend makes it necessary for Microsoft to raise its profile among consumers, especially in light of Apple's unprecedented success with the iPads, which have a two-and-a-half-year lead on tablets running Windows 8.

Indeed, Microsoft's stores will truly take on their intended shape later this month when Windows 8 ships. Of course, that begs the question of how much emphasis the stores will give to Microsoft's first-ever branded PCs, the Surface. Surely it won't be trivial, but to what extent will they obscure systems from Microsoft's OEM partners? While Microsoft isn't saying, the company must know it needs to give OEMs a fair shake. And presuming OEMs offer numerous different form factors, Microsoft's key goal is to showcase Windows 8 (and Windows RT), not simply its own devices.

Microsoft's future is riding on the success of Windows 8 and its new stores will allow it to strut its stuff better than anyone. While the stores are just one small avenue, if you happen to be in proximity of any of them, check one out and see what it can do for you.

See Also:

Posted by Jeffrey Schwartz on October 01, 2012 at 11:59 AM1 comments


I Failed the Bing Challenge

When I attended the grand opening of the Microsoft Store at the Walt Whitman Mall in Huntington, N.Y., I asked for one of the T-shirts that were being given to attendees. The man guarding the shirts told me I could have one only if I took the Bing Challenge.

It was just like the Pepsi Challenge back in the 1980s, in which people would drink from two different cups of cola, one Pepsi and the other Coke, while blindfolded. After drinking from both cups, the tester would say which tasted better. While I wasn't blindfolded for the Bing Challenge, I was instructed to put in five different searches and say which sets of results I thought were more useful.

One set of results was in the left pane and the other on the right. However, when choosing the sets of results I thought were more precise, I had no idea whether I was choosing Bing or Google.

I decided to search for articles or blog entries on various topics that I've written using my name and the topic of a given article. I did this five times and selected the set of results I thought gave a better list of my articles or blogs.

At the end of the test it gave me the tally. It turns out that after selecting the five search results, I blindly chose Google each time. As I walked away, I helped myself to two T-shirts.

See Also:

Posted by Jeffrey Schwartz on October 01, 2012 at 11:59 AM6 comments


IBM's New CEO Pegs Future on Intelligent Systems Using Big Data

IBM's new CEO Ginni Rometty is charting the company's future on the delivery of integrated systems that have cognitive capabilities. The goal is to enable businesses and government agencies to extract intelligence using existing data and new forms of information emanating from the growing proliferation of social media and devices ranging from embedded components to smartphones.

In her first major public address to partners as president and CEO, Rometty defined the coming of a new era in computing so significant that it was presaged only by the invention of computers in the early 1900s that were able to perform tabulation, followed by programmable systems ushered in the 1960s with the introduction of the System 360 mainframe.

"This third generation, it learns, hypothesizes, suggests, and you saw the first fruits of it with Watson," Rometty said in her keynote address at IBM's PartnerWorld Leadership Conference in New Orleans on Wednesday. Watson, of course, is the expert system that beat the reigning all-time champions on the game show "Jeopardy" last year. "Watson is being commercialized now. This will impact your business in your lifetime," Rometty said.

IBM kicked off this new era with its Smarter Planet initiative nearly four years ago, coinciding with its push into analytics with its $5 billion acquisition of Cognos, followed by the $1.2 billion purchase of predictive analytics supplier SPSS and numerous other deals that have helped fuel the company's Information on Demand portfolio.

At the PartnerWorld Leadership Conference, IBM executives emphasized delivering business outcomes rather than selling technology. While this is not a new concept, the company is evolving its technology toward helping people make faster decisions with information that is precise and contextual. At the same time, the company wants partners to think more holistically about providing this technology with integrated hardware, software and cloud-based solutions.

While launching new incentives to attach software to hardware sales and vice versa has generated a lot of buzz, the bigger message from IBM executives in New Orleans was the company's goal to deliver systems that are so-called "integrated by design."

It was hard to escape discussion about big data, as IBM officials pointed to the explosive growth of structured and unstructured information that enterprises need to use, and the opportunity IBM sees behind creating business analytics technologies that puts information into the hands of people on the front lines of decision-making.

"Big data is going to characterize this new era but it is no good without cognitive, insight-driven systems, and it's going to be an era defined by computing moving to the front office," Rometty said. "I think of analytics as a silver thread -- it's going to weave through the future [in] much of what we do."

For some partners, particularly those trying to bring this to small and medium business customers, this vision is a tough sell.

"One of the concerns I hear from the guys who were dealing with the SMB is, 'I can't talk about big data to SMB customers. They don't get it,'" said Darren Bibby, program VP for software channels and alliance research at IDC. "So I think some of this is aspirational and there needs to be a way for partners to tell those stories to SMBs, because there's a little bit of that gap."

While that may be a challenge for IBM, Rometty is convinced the company is going down the right path, having spent her first 60 days in her new role as CEO meeting with 100 different CEOs. "One of the most profound things they talk about is data will separate the winners and losers in every single industry," she said. "You can think of data as almost like the world's next, great natural resource, except it's not limited. It's available to everyone, so it's going to be what you make up of it."

See Also:

Posted by Jeffrey Schwartz on March 01, 2012 at 11:59 AM0 comments


IBM Steers Partners Toward Integrated Hardware and Software

IBM is taking new steps to motivate its partners to sell more solutions bundled with hardware and software. Big Blue hopes to make that happen through newly engineered systems and added incentives to bring those who sell hardware and software together. It's certainly not the first time we've heard that refrain from IBM or other large players, most notably Oracle.

At its annual PartnerWorld Leadership Conference in New Orleans this week, IBM is talking up the need for partners to take a more holistic approach to solutions selling. It underpins IBM's emphasis on business analytics, big data, the move toward cloud computing and providing intelligent systems that are the basis of its Smarter Planet initiative.

"We are going to shift to a higher value," said IBM President and CEO Ginni Rometty, speaking in a keynote address Wednesday at PartnerWorld.

In an effort to motivate this behavior, IBM senior VP and group executive for software and systems Steve Mills outlined what was internally known as the company's "Blue on Blue" initiative, more formally called the IBM Solution Accelerator incentive. IBM is hoping the new incentives will encourage channel partners to bundle hardware with its software solutions or vice versa, along with cloud and traditional services.

Providing so-called integrated offerings was a common theme here at PartnerWorld, not just in the form of incentives but in the company's approach to delivering IT. IBM said it will launch a new portfolio of systems on April 11 that likely will advance the notion of tightly bundled hardware and software. Senior VP Rod Adkins, who heads the company's Systems and Technology Group, offered scant details on the planned launch, code-named "Integrated Expert System."

"We need platforms that can deal with data and data growth. We need platforms optimized to the application of the workload," Adkins said.

As part of its latest bundling incentive plan, IBM is offering 5 percent rebates to partners who upsell certain hardware in a software deal and 15 percent rebates for software added to a systems deal sold to a single customer. On top of that, IBM is offering an additional 10 percent rebate that addresses specific types of solutions such as business analytics, risk management, security, compliance and social computing for business. Partners can also earn an additional 1 percent when clients finance their solutions through IBM Global Financing.

"The idea of putting hardware and software together and giving you the opportunity to participate in combined hardware software sales opportunities to deliver more margin to your business," Mills told more than 1,000 partners attending the conference. "In simple terms, it's an incremental incentive. It's above and beyond all of the incentives out there today. Nothing is taken away, reduced or eliminated, so it's entirely additive in nature."

Mark Hennessy, who took over just two months ago as GM for IBM Business Partners, said in a press briefing following the opening keynote that the launch of these new incentives was not motivated by concerns that IT spending was falling off but rather by a desire to address customer requirements.

"Customers are looking for business partners to bring to them integrated solutions that deliver real business outcomes quickly, so combining IBM hardware and software with their solutions can deliver that business outcome faster, as opposed to someone having to integrate lots of different pieces," Hennessy said. "It's a real benefit to our partners because when they combine those IBM hardware and software components and optimize and integrate those components to deliver value, they get a much more differentiated solution in the marketplace, and they get more value to the clients so they get better margins. We're just putting on top of that some additional incentives."

Diane Krakora, CEO of PartnerPath, a consultancy focused on IT partnerships, said IBM will need to ensure it can provide adequate deal registration, which won't come easy considering these are separate systems today. "That's can be hard," Krakora said, adding that the new rebates could encourage partners to step up their bundling of hardware and software. "HP, Oracle and Cisco has been trying to sell across their portfolios for years."

Fifty percent of hardware sales and 15 percent of software is sold through IBM's channel partners, said Wilfredo Sotolongo, VP of business partner and mid-market sales for IBM in North America. Even with the incentives, Sotolongo acknowledged it could be challenging to get many partners to take more holistic views to bundling hardware and software.

"To get a single customer-facing team to successfully sell an integrated solution, while some customers are ready to buy that way, many are not," Sotolongo said. "It's a call to action. It's time to dust off the skills we used to have 25 years ago and sell totally integrated solutions, and we're make it financially attractive to do that."

Posted by Jeffrey Schwartz on February 29, 2012 at 11:59 AM0 comments


Dell Adds AppAssure to New Software Business

Dell's new software chief John Swainson is wasting no time in adding to Dell's newly formed software business. The company last week said it is acquiring AppAssure, a provider of backup and recovery software.

The acquisition is the first since Dell tapped Swainson, the former CEO of CA Technologies and a longtime head of IBM's software business, as president of its new software business, earlier this month.

Founded in 2006, Reston, Va.-based AppAssure provides software that backs up servers and virtual machines (including VMware, Hyper-V and XenServer) as well as individual physical systems. The software can recover applications from premises-based datacenters and the cloud.

In addition to backing up and replicating VMs, Dell says it will be a welcome addition for its EqualLogic and Compellent storage arrays. "AppAssure's unique architecture delivers innovative cloud-enabled backup and replication solutions that meet the challenges of protecting the explosive growth of data in both virtual and physical environments," said Brad Anderson, president of Dell's Enterprise Solutions Group, in a statement.

AppAssure may not be a household name in the backup and recovery business but Forrester Research analyst Rachel Dines said in a blog post that the company has grown rapidly over the past year. And now that Dell is no longer reselling EMC's Data Domain solution, Dell will have its own internal IP with AppAssure and its recently released DR4000 appliance, based on its 2010 acquisition of Ocarina.

Dines said all of these moves together "signals that Dell is finally getting serious about addressing the backup and recovery market," particularly for SMBs. "Long term," she added, "I wouldn't be surprised if Dell also leveraged the DR4000 along with AppAssure to create another converged backup appliance to compete with EMC's Avamar and Symantec's Backup Exec (and maybe even NetBackup) appliance series."

The software, Dines points out, also offers the components needed for Dell to add more cloud backup capabilities.

Posted by Jeffrey Schwartz on February 27, 2012 at 11:59 AM0 comments


HP Extends Cloud Enablement for Partners

A lot has changed at Hewlett-Packard over the past year but one thing that hasn't is the company's desire to be a major player in cloud computing. And HP is looking for help from its partners.

As thousands of partners converge in Las Vegas this week for the HP Global Partner Conference (GPC) 2012, they will see a very different company than they did at last year's HP Americas Partner Conference. The company has a new CEO, Meg Whitman (actually it had a new CEO last year, too, but we know how that worked out), and will likely give little attention to last year's conference star, webOS, which the previous chief, Leo Apotheker, positioned as a pillar of its cloud strategy.

But HP also used last year's conference to start enabling partners to offer the company's emerging cloud portfolio by kicking off its CloudSystem Partner Program, which included the Cloud Enablement Program. That program offers training, certification, financial incentives and leasing options to help partners sell HP's "Converged Infrastructure" of servers, networking and storage infrastructure, as well as HP's CloudSystem cloud software.

Fast-forward almost one year and HP partners are learning that the company is now making cloud-enablement a core specialization in its flagship PartnerOne channel program as well as adding new offerings to its ServiceOne portfolio. "HP is going to be growing the cloud marketplace, helping partners grow cloud and services," said Mike Galane, HP's senior director of worldwide channel marketing strategy and planning for the company's Enterprise Servers, Storage and Networking business, in an interview.

Based on its own internal research, HP estimates cloud computing will be a $143 billion business next year. Galane outlined three new offerings all aimed at helping partners transition themselves and their customers to the cloud. They include:

  • HP Cloud Builder Specialist: This is the new HP PartnerOne designation for partners that have gained expertise in the company's cloud offerings, including HP CloudSystem, its platform for building and managing hybrid clouds. The new Cloud Builder Specialist designation offers training and access to HP's Cloud Centers of Excellence, announced last year. At the time there were fewer than 20; now there are over 100, Galane said.

  • HP Interchange: HP Interchange is a social network aimed at getting partners to collaborate with other partners that may be able to jointly bring a complete cloud solution to customers. "Many of our conventional partners know a lot about putting more traditional solutions together but may run into areas like security where they may have challenges, or managing a cloud environment where they want to work with some more software-savvy-type partners," Galane said. "HP Interchange is a way for them to meet, work with partners, and we will make some announcements about financial incentives to them. It's more than just a place to meet there will be financial advantages for partners who participate with those that are supported in HP Interchange."

  • CloudAgile expansion:  HP is now letting its channel partners join the HP CloudAgile program as service providers. This will allow partners to resell their services, Galane explained. In addition, the company will up the ante in financial incentives for service providers.

HP is also announcing at GPC 2012 that its ServiceOne program will allow partners to sell their own branded storage services, combined with HP's branded services offerings. HP announced ServiceOne in July and rolled it out in November. ServiceOne is a program that allows partners for the first time to sell many of the HP-branded services that were once only offered by its own services organization.

"We are completely enabling the partners with our entire technology services portfolio," said Ken Archer, VP of Americas channels and alliances for HP's Technology Services and Enterprise Business, in an interview. The new element to HP ServiceOne allows partners to sell their own branded services backed by HP. "We are enhancing the ability for partners to have a storage focus instead of a services focus," Archer said.

The partner-branded services HP is encouraging emphasizes backup and recovery, storage efficiency and modernization services. I asked Archer why the emphasis on storage and he explained it is just the first of various partner-branded services HP is offering. Look for others to come based on platforms and networking.

Posted by Jeffrey Schwartz on February 13, 2012 at 11:59 AM1 comments


Microsoft To Bring Dynamics CRM to iPads and Other Mobile Devices

Looking to fill a key hole in its customer relationship management software, Microsoft said today it will bring its Dynamics CRM suite to the iPad and other popular mobile device platforms next quarter.

The move should be a welcome addition to partners who implement Dynamics CRM and its customers as rival Salesforce.com has talked up its iPad and mobile device support for some time. And it comes as there is no slowing down enterprise adoption of iPads. Microsoft's Q2 Service Update of Dynamics CRM will also offer native mobile client support for the iPhone, Android and BlackBerry mobile devices and of course its own Windows Phone 7.5 platform.

Microsoft revealed its plans at the eXtremeCRM 2012 Berlin conference today and in a blog post by the new general manager of Dynamics CRM  Dennis Michalis who last month replaced longtime GM Brad Wilson. "We are providing more flexibility in mobility than any other CRM provider. Period. CRM where you want to consume it on the device you use," Michalis wrote.

The company said the new offering, called Mobile CRM, is cloud-based and is designed to provide mobile client service specific to the supported platforms, allowing sales reps to synchronize information such as sales pipelines, providing offline access to the data. Based on Microsoft's xRM, the application development platform, partners and customers will be able to extend their existing CRM apps to CRM Mobile.

Dynamics
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Microsoft Dynamics CRM Mobile Marketing Dashboard view on iPad. Source: Microsoft

Microsoft is also making Dynamics CRM more social with the new updated release, which will offer activity feeds, status updates and the ability to "like" content. Salesforce.com has made social networking a key theme of its cloud-based CRM portfolio.

Partners and customers will be able to manage CRM Mobile centrally, Microsoft said. Administrators will be able to configure record types, forms, views and offline synch rules as well as the navigation structure for the mobile app, according to the Release Preview Guide. The goal is to consolidate management of the CRM app for mobile users. To support the requirements of differing groups within an organization, admins will be able to configure multiple role-specific profiles customized for specific users. It will also support remote wipe in the event a mobile device is stolen or lost.

CRM Mobile will cost $30 per user per month and will be released in 40 global markets supporting 41 languages (though initially in 24 markets supporting 10 languages).

 

Posted by Jeffrey Schwartz on February 07, 2012 at 11:59 AM1 comments