Reader Feedback: You Are Preparing for a Recession

"We are definitely preparing. Many of our customers appear at the moment to be scaling back on new purchases; luckily we provide managed services to many of our customers, which will allow us to maintain a steady revenue flow, since it would be difficult for those customers to do without our support services as we basically are their IT department. However, the scaling back of the purchases of new machines and other equipment does also hurt our bottom line."

That's the beauty of managed services -- that steady revenue stream. Perhaps feeling a tad less confident than Joseph, James proposes some more radical suggestions:

"As the economy slows down, people are not going to be able to pay for legal software and the high costs of IT repair, nor do constant changing of operating systems. We need to take a step back so that we may go forward again. I feel that we should continue to run Windows XP and that Microsoft should produce plug-in modules for Windows for people to try out. These modules should be free and not on a trial basis only. These modules should have the ability to be uninstalled.

"I say make Win XP run more stable and make XP Pro the standard. This will remove issues between the home and office worker and the driver being written for the OS. Once we have reached a plateau, then we take on a new operating system with the new improvements that consumers like the most and need the most. Too many options of operating systems have caused an industry-wide lack of drivers and usable application software. We are trying to drive forward too fast. Today's operating system uses far too many system resources, causing a major lack of speed."

So, James says, as the economy slows down, maybe we should, too. Or maybe we'll have to. We'll see.

While we're here with reader feedback, let's throw in a response from Michael in Australia, mate, who writes about Microsoft's shifting executive roster and the shifting strategy that seems to be going with it:

"I personally went through some of what you are describing with Microsoft, though on an infinitely smaller scale. I purchased and built up a small, regional IT shop and opened a second shop in another thriving regional centre. Then there were some changes in my life that required me to scale down my business interests, so I sold the business. I worked with the new owners for six months; the business was healthy and profitable for those six months. Then the new owners made the decision to chase the consumer market at the expense of their corporate clients, and within 18 months the business was gone.

"Now, one of the points that I'm going to make with this story (be it far removed from the scale of Microsoft) is that there was absolutely nothing wrong with the business skills of the new owners. One of the new owners was a regional manager for a financial company with many years of experience in various small businesses in his past. The other was a seasoned IT manager. The parallel I'm trying to draw here is that regardless of the experience and skills of the management and the health of the business now, if your business gets too focused on pursuing a particular market you may end up in a dry creek (isn't Microsoft currently trying to woo the small business market?).

"Before anyone replies and says, 'Microsoft has sufficient resources to ride out such a mistake,' you've got to ask yourself the question: 'Would you invest in a hydroelectric power station that has cracks in its dam wall and gets its water from a desert catchments area?' Yeah, sure, they've got a diverse portfolio of electricity (read: OS), water (read: Office), shares (read: shares), etc., but..."

Michael, that's why we suspect that Microsoft is trying to move the market rather than be moved by it. Chasing the rabbits of SaaS could end up being costly and counterproductive. But developing your own (or, in this case, Microsoft's own) strategy and using your considerable size and influence to "help" customers conform to it on your schedule could be a successful blueprint for riding out the eventual decline of fat-client, on-premise computing. It's all about using influence rather than being influenced.

Oh, and while we're here, there was one more reader comment we enjoyed this week. Pete took issue with our reference to the "perfect" New England Patriots:

"Don't you mean the CHEATERS from New England? I wonder if there will be an episode of that late-night TV show, 'Cheaters,' with Bill Belichick being surveilled and confronted by Joey Greco and his band of investigative thugs with video cameras?!"

If anybody's going to do any surveillance, Pete, it'll be Belichick himself. And, as LaDainian Tomlinson (RCPU's favorite player and fellow TCU alumnus) said -- about the Patriots -- not so long ago: "If you ain't cheatin', you ain't tryin'."

Thanks to all who took the time to write. The mailbag is always open: [email protected].

Posted by Lee Pender on January 24, 20081 comments

Microsoft Stuffs Partner Pockets with 'Big Easy' Program

Keeping track of the customer promotions and partner subsidies on the Microsoft Incentives page used to be a full-time job for Microsoft partners. Maybe not anymore. Next month, Microsoft is launching a single partner subsidy program called the Big Easy Offer. Microsoft is putting $10 million behind the program, which offers partner subsidies for customer purchases of nearly all of Microsoft's main SMB-targeted products, with the exception of Windows Vista. Partners who can upsell, cross-sell or sell more expensive licensing options see the subsidy go up on a sliding scale.

According to Microsoft, the subsidy checks, which are sent to the customer but made out to the partner of the customer's choice, often lead to secondary purchases of hardware, services, training or additional software from partner companies ranging from five to eight times the value of the subsidy itself. Granted, a program with sliding benefits covering dozens of SKUs against a handful of licensing options is, itself, fiendishly complicated, but Microsoft is providing an online calculator so partners can just enter the numbers rather than learn all the rules.

Bekker talked to Christopher Large -- who should be a rapper of some sort with a name like that but is, in fact, Microsoft's group manager for U.S. Sales Programs -- to get all the details on the Big Easy promotion. They are here.

Posted by Lee Pender on January 24, 20080 comments

Microsoft Money: More Big Profits in the Way?

Times look tough, financially, and they might be getting tougher soon. So you know what that means: As always, Microsoft makes more money. Redmond is due to reveal its financial results on Thursday, and already the press and Wall Street watchers are using phrases like "sharp rise in profits."

Now, as the Reuters story linked explains, part of that "sharp rise" stems from Microsoft's deferral last year of more than $1 billion in revenue. Still, while the rise might not be as sharp as it first appears, it's still a (potential) rise, and a pretty impressive one at that. Hopefully it bodes well for Microsoft partners, too, who should, in theory, benefit from Redmond's success.

Last week, we asked you what you're doing -- if anything -- to prepare for a recession. We'll have your responses in RCPU tomorrow. Since Microsoft won't announce earnings until Thursday, and since we no longer have a regular Friday edition, we'll have to save analysis of Microsoft's earnings for next Tuesday's edition.

There's still time to send us your thoughts on how a recession would affect you. The address, as always, is [email protected].

Posted by Lee Pender on January 23, 20080 comments

Dell Ships Sharp New Servers

Posted by Lee Pender on January 23, 20081 comments

Secure Computing Updates SafeWord

Posted by Lee Pender on January 23, 20080 comments

New EMC Product To Mozy into Fortress

Posted by Lee Pender on January 23, 20080 comments

Redmond Hires Mickey Mouse CIO

Posted by Lee Pender on January 22, 20080 comments

Microsoft: Exchange Clobbering Notes

Posted by Lee Pender on January 22, 20080 comments

Microsoft Getting Real About Virtualization

Oh, sure, sometimes Microsoft waits too long to stage its comeback and gets clobbered -- think consumer search and personal music players (otherwise known as iPods). But in so many "games" in years past -- the browser wars, productivity-suite competitions, even the battle for operating-system supremacy -- Redmond has found some way (even if it wasn't always entirely legal -- yes, we're sticking with the Pats theme here) to break out of an early funk and steamroll the competition.

And so we have this week's virtualization shindig taking place on the home field in Redmond. Once again, Microsoft stumbled out of the gate trying to react to a new technology. Once again, an opponent -- in this case, VMware -- has a big lead. And, once again, Microsoft is on the comeback trail.

We all know about Hyper-V, the virtualization technology that will eventually come with Windows Server 2008. But, this week, Microsoft gained a few more yards in its pursuit of VMware's goal line. For one thing, it opened up its virtualization policy on Vista. Finally, Redmond is going to open all versions of the OS to virtualization. (And before you go saying, "Who cares? It's only Vista," keep in mind that analysts -- and, yes, even RCPU -- are predicting that Vista will finally make serious inroads into the enterprise in 2008. So this week's announcement should eventually carry some weight, even if it seems trivial right now.)

Redmond also bought this week a little company called Calista -- presumably not named after the former star of "Ally McBeal," not that we ever watched that show -- which makes technology to improve the desktop virtualization experience. Combine that acquisition with Microsoft's partnership with Citrix to market desktop virtualization and to allow interoperability between Hyper-V and XenServer, and we see a virtualization strategy coming together in Redmond that shows some flexibility and some backbone.

Of course, we're not even close to counting VMware out of this contest, given the lead the popular -- and, let's not forget, EMC-owned -- vendor already has. And Oracle and Sun, among others, pose formidable opposition, as well. What we are seeing, though, is Microsoft finally connecting on a few passes, getting a few first-down runs, making a defensive stand or two and gearing up for a real battle in virtualization. Given Microsoft's built-in advantage -- massive existing investment in its technology -- this one should be a battle until the final gun.

What's your take on Microsoft and virtualization? How do you see the strategy taking shape? Let me know at [email protected].

Posted by Lee Pender on January 22, 20081 comments

Son of Vista To Arrive Next Year?

Posted by Lee Pender on January 22, 20082 comments

F5 Steers Partners Toward Services

If Hale's name sounds familiar, it's because he was with Microsoft for 17 years and has just been with F5 for the last six months or so. But he's been a busy guy in his short time at the new gig. Primarily, he's trying to take an F5 partner base that's "very transactional in nature," he said, and get some of its membership to start providing services as well as ringing up sales.

The main thing that Hale and his organization want to do is get partners up to speed in terms of technical know-how, making sure that they're prepared to provide services for disciplines including application delivery, networking and infrastructure, and storage virtualization. And while Hale said that partner technical readiness "is not a real glamorous thing," it is, he said, "the foundation kingpin of everything we do. If we don't get that right, you're done from square one."

F5 currently has about 300 partners in North America, Hale said, and rather than trying to move all of them to a services-based model at once, he wants his organization to work with those most interested in getting serious about services.

"We're not going to do some big, broad-based approach," he said. "We'll take a few partners that really want to be in this space."

Along with getting partners up to speed in terms of technical expertise, F5 is focusing on pairing partners up with each other so that they can combine competencies and serve customers together.

The company is also reaching out to one of its own primary partners, Microsoft, with a series of white papers on implementations of Microsoft technologies, mainly Exchange, SharePoint and Dynamics.

"I'm saying, 'Hey, Microsoft, show me where you've got implementations going on, and we will go optimize it,'" Hale said.

Posted by Lee Pender on January 17, 20080 comments

Ascentium Buys Artemis

Posted by Lee Pender on January 17, 20080 comments