Ozzie's Vision of the Cloud Includes Partners

Microsoft did drag out Ozzie at its Financial Analyst Meeting last week. In some ways, that's more interesting. In the course of giving Wall Street the big picture, Microsoft executives sometimes reveal how much they are -- or are not -- thinking about the channel in their plans.

First the good news. Ozzie mentioned partners -- and not just ISVs but also VARs -- repeatedly during his talk. He wasn't the only one. Chief Operating Officer Kevin Turner also emphasized to the financial analysts that Microsoft's 645,000 partners, which he described as "the most comprehensive partner ecosystem in the technology industry," were a "tremendous strategic asset" for the company. It's good to hear Turner talk about the importance of partners to audiences not made up entirely of Microsoft partners.

Now for the mixed news from the Ozzie talk. Ozzie painted a rosy picture for the analysts about Microsoft's positioning as cloud computing approaches. He repeated all the usual stuff about how Microsoft's ability to be on the client, on the server or in the cloud is just what the real world needs.

"Every major technology inflection point over the years, at least as long as I've been in this business, has yielded new opportunities for those who are able, willing and well-positioned to act on those opportunities," Ozzie said, with the implication that Microsoft was able, willing and well-positioned.

Certain partners will be ready, or will make themselves ready, to join in on this envisioned money-fest. "Many business ISVs and many VARs will be looking to move their applications and solutions to the cloud just like we have," Ozzie said. "For them, like us, this technology shift towards services represents a significant opportunity, a chance for them to deliver to their enterprise customers the power of choice within their own application or solution." He called Microsoft's opportunity in the space "perfectly aligned" with the opportunity for partners.

The reason that's mixed news for partners isn't because any of it isn't true. It's the "many" modifier Ozzie uses to describe ISVs and VARs. The opportunities will be out there, but the channel has to change aggressively to meet it.

Later in the Q&A portion, Ozzie elaborated on how partners should change to take advantage of Microsoft's cloud computing infrastructure -- a key point given the aggressive pricing and partner margin structure in the recently announced Office S+S offerings (partners get 12 percent for bringing in a customer and 6 percent annually for renewals).

"I think the high-level model that I would use is the enterprise space. The costs of the service will be buried and embedded within the higher-level pricing of the offering," Ozzie said, adding that for VARs, "margins will increase as you go up the stack in terms of value."

Ozzie's financial analyst talk also offered some food for thought for partners involved in Windows or Office deployments. He explained a little of his thinking on how S+S might store both settings and data in the cloud. He discussed the idea in the context of home users, but it could have a substantial impact on the way organizations buy and use computers.

"By removing the psychological burden of managing many devices, by making these devices feel more like smart appliances, by removing the worry about setting up a new or additional PC or laptop that you might purchase, I believe we'll ultimately see a significant opportunity for growth because of multiple PCs," Ozzie said.

I would have liked to hear more elaboration on Ozzie's vision for partners in both cases -- but at least he's telling financial analysts where partners will fit in. What do you think about Ozzie's vision for partners? Let me know at [email protected].

Posted by Scott Bekker on July 30, 2008