Chin Up, Partners: Microsoft Works To Encourage Channel in Tough Times

It's a very upbeat and totally pragmatic message, and it's totally appropriate and welcome at a time like this. This is Microsoft and the Partner Program demonstrating leadership at a time when partners need it -- and that's exactly the kind of thing the channel should welcome, especially during an economic downturn.

Still, though...ouch. These are the kinds of messages that bring to mind depression-era billboards that encouraged jobless men to not give up -- messages that are encouraging but also pretty ominous. OK, granted, we don't think that things will get anywhere near this bad, and we're not seriously suggesting that there will be bread lines in Redmond or anywhere else any time soon.

Microsoft is still a monster financially, and most partners are and will be, we're guessing, profitable right through the current recession and into a recovery. But growth could and likely will flatten out, or even shrink (in which case it wouldn't be growth at all...), and it seems highly unlikely right now that 2009 will be as kind to most companies as 2008 was. And 2008 was pretty brutal compared to, say, 2003-2006. Whispers of potential double-digit unemployment and a recession that could deepen in the quarters to come are not encouraging.

Although technology in general seems to be getting a glancing blow from the storm that's brought down huge names on Wall Street and is threatening to sink GM(!) and others, a few tech companies are starting to show vulnerability. Cisco issued a revenue warning with its last earnings statement, and Microsoft's Dynamics numbers -- remember, Dynamics is business software and therefore provides some barometer as to how much companies are spending on enterprise technology right now -- have cratered recently. RCP Editor in Chief Scott Bekker lays out some of the damage:

"In the first quarter of fiscal year 2009, the growth in Microsoft Dynamics customer billings fell off a cliff. They were at a 10 percent increase compared to 18 percent the year before and 19 percent the year before that. This at a time when the rest of the sales in the Microsoft Business Division, which is primarily Microsoft Office, were growing at 20 percent -- consistent with the previous year. Microsoft shook up the Dynamics field organization in the United States to help fix it."

Now, maybe that's just Dynamics struggling -- or, more specifically, growing at a slower rate than it has been -- but we suspect that what's happening with Dynamics is not an isolated case. (Microsoft, by the way, has responded by offering a 0 percent financing deal on Dynamics applications.)

Not that partners don't know all of this, of course. This downturn has rolled in like a slow-moving hurricane rather than like a flash flood. Everybody's getting ready for it -- even Microsoft, which wants its partners to be prepared. Still, Watson's message, while appropriate, isn't exactly a sign that Redmond expects things to get better any time soon.

How long do you think it'll take the economy to turn around? How bad are you preparing for things to get? Tell us at [email protected].

Posted by Lee Pender on November 13, 2008