IDC Forecasts Slowing IT Spending Throughout 2008

In a research press release Tuesday based on IDC's "Worldwide Black Book Q1," the Framingham, Mass.-based market research firm predicted that worldwide IT spending will increase 5.7 percent this year, compared with 7.2 percent last year.

The main cause of the drag appears to be the United States, where last year's 6 percent growth is expected to dip down to about 4 percent this year. Breaking the U.S. forecasts into sectors, IDC expects hardware spending to grow by 2 percent, software spending to grow by 7 percent and IT services spending to grow by 5 percent.

So there you have it -- a broad set of revenue targets against which you can benchmark your sales numbers.

In addition to the figures, Stephen Minton, IDC's vice president of worldwide IT markets, clearly sketched out the order in which the IT shoes drop in an IT spending slowdown.

"In every previous IT recession, the first sign of weakness has shown up in a softening of PC shipments," Minton explained in a statement. "This has then transmitted to other hardware sectors within one quarter, to software license sales within half a year, and to the IT services sector if the recession persists for more than three quarters."

Minton suggested only that the industry "could" be at the beginning of an IT spending slowdown.

Posted by Scott Bekker on May 13, 20080 comments

Big Easy Gets a Boost

The program was designed to consolidate Microsoft's confusing array of subsidy programs, and with a sliding scale of incentives, to increase the size of the subsidy check when partners up-sell, cross-sell or sell more expensive licensing packages to customers.

On Wednesday, Microsoft announced additions to the offer, which runs through the end of Microsoft's fiscal year, ending June 27. Microsoft is adding higher subsidies on Windows Server and Small Business Server, Open License and Software Assurance (LS&A) coverage for SQL Server, Windows Server and Small Business Server product groups, and Open License for Office Project.

Posted by Scott Bekker on May 08, 20080 comments

More Software Piracy Busts

"One of the reasons that we're taking these actions is that we received over 400 complaints over our 1-800-RU-LEGIT hotline," said Bonnie MacNaughton, senior attorney and North American regional lead on the Microsoft Worldwide Anti-Piracy Enforcement Team.

North American customers were suspicious when they installed their software and saw notifications that the software was licensed for users in the Middle East only, or licensed for students and academic institutions only, MacNaughton said.

The software with the Middle Eastern notification arose from a PC program in Egypt called the PC Initiative. The program is designed to provide low-cost software to Egyptian citizens. Instead, according to Microsoft, the dealer supplied Egyptians with counterfeit software and exported the actual software to the lucrative U.S. market, where it was presented as legitimate. Egyptian authorities raided a source of the unlicensed software on April 30, according to Microsoft.

Other programs exploited by software dealers were the Volume Licensing program, where dealers allegedly stole product keys and even peeled Certificates of Authenticity off of computers, and the program discounting software for students and academic institutions.

In addition, Microsoft built on settlements in previous lawsuits against software dealers in the United States to trace the source of their software to a firm in the Netherlands.

"Microsoft has alleged that HW Trading BV and its principal, Samir Abdalla, received more than $3.7 million from just three dealers in the U.S. between March 2006 and March 2007 in payment, in whole or in part, for unlicensed software," Microsoft said in a statement.

Posted by Scott Bekker on May 08, 20080 comments

Microsoft Financing To Expand in 2008

One of the things partners told us as we reported the story was that they're looking harder at Microsoft Financing to help close deals as the economy sags. Well, there was some good news from Microsoft on that front in The Wall Street Journal on Wednesday. (Click here. Requires paid subscription.)

Not only are partners thinking about relying more heavily on financing, but Microsoft is thinking about it, too. While many lenders are short of credit and some major tech firms, notably Dell Inc., are considering selling off their financing arms, according to the Journal, Microsoft is going full-steam ahead. The company issued $780 million in loans in 2007 and expects to increase that to $1.25 billion in 2008.

"The decision to do all this was tied to the macro situation," Brian Madison, general manager of Microsoft Financing, told the Journal.

Actually, Madison has been talking aggressively about growing Microsoft Financing for years. When RCP talked to him at the Worldwide Partner Conference in 2006, he was hoping to double the portfolio that year from $500 million to $1 billion. But the key here is that Microsoft is publicly looking to ramp up this valuable closing tool, not scale it back. In tough economic times, Microsoft Financing can be a lifeboat.

For those Microsoft partners who haven't used Microsoft Financing, it works like this: You make the sale and turn the deal over to Microsoft Financing. Once Microsoft approves the customer's credit, Microsoft cuts you a check for 100 percent of the software, hardware and services cost -- up front -- and starts billing the customer in affordable monthly chunks. Get the details here.

Posted by Scott Bekker on April 17, 20080 comments

EMC Makes Bid for U.K.-Based Partner Firm

Conchango's board unanimously recommended the offer to Conchango shareholders, and the deal is expected to close this month.

EMC positions the move as giving the Hopkinton, Mass.-based storage giant's Microsoft consulting practice a foundation in the United Kingdom and Europe.

"The addition of Conchango will mark another key milestone in the evolution of EMC's rapidly growing consulting services organization, significantly expanding our global capabilities to design, build and deliver tightly integrated solutions for our customers' most critical business applications," said Howard Elias, president of EMC's Global Services and Resource Management Software Group, in a statement.

Conchango would bring about 300 professionals to EMC's existing Global Services Division, which has 12,000 employees. According to EMC, Conchango and its employees will become the core of EMC's Consulting & Solutions Integration Services organization in Europe. Conchango co-founders and joint managing directors Mike Altendorf and Richard Thwaite will lead EMC's European consulting practice.

Conchango was founded in 1991 and has seven Microsoft competencies. Customers for its solutions include Tesco, Virgin Atlantic and SKY.

Posted by Scott Bekker on April 03, 20080 comments

Entrigue Launches Partner Program

Called the Entrigue Authorized Solution Ecosystem (EASE), the program offers discount margins ranging from 20 percent to 30 percent for U.S. partners in a three-tier program. To qualify for the top-tier margin of 30 percent, a reseller will need to sell at least 15 server licenses per quarter.

Internationally, the company is in the process of signing value added distributors to exclusive deals for countries in Europe. Those partners will receive higher margins, but also take on more costs, such as localizing software and translating materials.

“The nature of our solutions makes them a great fit for integrators and IT management companies that provide outsourced IT services as well as resellers that specialize in IT management,” Kimberly Overcash, Entrigue channel manager, said in a statement.

Script Start allows administrators to use graphical logon scripting on Windows, Linux and other servers to manage Windows desktops, including Citrix XenDesktop and VMware VDI virtual machines.

Using Script Start, administrators can map drives, install printers, configure Outlook profiles, adjust Internet proxy settings and configure RDP connections, among other tasks.

The product features zero footprint on desktops, automatic publishing of applications via Remote Desktop Protocol and per-Domain Controller as opposed to per-seat licensing. The software costs $990 per domain server.

Meanwhile, the company is working on a subscription-based offering for systems integrators looking for a solution to help them manage desktops on behalf of small business clients, according to Jason Smith, vice president of business development for Entrigue.

Visit www.scriptstart.com or www.scriptstart.com/partner for more information.

Posted by Scott Bekker on March 31, 20080 comments

NetApp Expands Channel Program

The new NetApp channel program is called the Authorized Professional Service Partner Program. The Sunnyvale, Calif.-based company, which on Wednesday announced 21 percent revenue growth for the quarter, claims about 1,000 partners worldwide in its long-standing channel program, with indirect sales accounting for about 70 percent of the company's revenues.

Rick DeTurck, senior director of services marketing for NetApp, says that NetApp hopes to bring about a quarter of its channel partners into the Authorized Professional Service network in the first year, and up to half of its partners into the program eventually.

At the same time, the company is trying to bring in systems integrators who haven't worked with NetApp. “We absolutely expect that this will attract partners from other vendors into the NetApp ecosphere,” DeTurck said.

DeTurck estimated that a third to a half of existing NetApp partners also belong to the Microsoft Partner Program. “There's a fairly good overlap,” he says. “The thing about NetApp is that the Microsoft applications really do well on NetApp storage. We've customized our software to take advantage of [Microsoft] operating system and the applications, so they can do snapshots and backup recovery and instantaneous recovery of mailboxes for Exchange or Web sites for SharePoint.”

According to NetApp's announcement: partners who meet the authorization requirements can sell partner-branded professional services of NetApp technologies, specialize in a NetApp solution area, gain access to training, methodologies and best practices. The solution areas are based on practice areas that NetApp's internal professional services team has already implemented with customers.

The first set of specialty solution areas for partners are:

• storage system design and implementation,
• network storage for virtualized infrastructure,
• virtual tape library design and implementation and
• Microsoft applications.

Later, NetApp plans to roll out specialty solutions for the channel in disaster recovery, backup and recovery, metrocluster, security encryption and data assessment.

Posted by Scott Bekker on February 13, 20080 comments

A Silver Lining in a Cloudy Report

The Institute for Supply Management issued its January report on the service sector on Tuesday. When the institute's monthly index is above 50, it means growth in the service sector, which accounts for about two thirds of the economy. An index score below 50 is a contraction. The index for January was 44.6.

It was the first reading below 50 since December 2001, and the report helped trigger a 370-point slide in the Dow Industrial Average on Tuesday by feeding into stock traders' fears that we're in a recession.

The institute divides the service sector into 17 categories. Fourteen sectors contracted in January, three showed growth. Among those three, the category that would include many service-related channel partners -- "Professional, Scientific & Technical Services."

The report is available here.

Posted by Scott Bekker on February 05, 20080 comments

Digging for Diamonds in Microsoft's Quarterly Filing

Baseline Revenues
First off, Microsoft reported an increase in revenues of 30 percent to a record of $16.3 billion. But don't feel like you're trailing the market if your firm didn't do 30 percent more business in the fourth calendar quarter of 2007 than in the same quarter of 2006. For one thing, Microsoft had a weird accounting situation this time. They're comparing results to a quarter when they deferred $1.64 billion for technology guarantee programs. You remember: Because Windows Vista and Office 2007 shipped too late for holiday shoppers, Microsoft had to calm down OEMs by offering vouchers so people could upgrade for free or at lower cost if they bought systems before Vista shipped. The result was that sales Microsoft made in October-December 2006 got credited to the January-March period of 2007. Take that deferral out of the results, and Microsoft's revenues were 15 percent higher than the year-ago quarter.

OEMs and Premium Mixes
The OEM channel still accounts for 80 percent of Windows client revenue. Meanwhile, Microsoft's strategy of increasing the percentage of customers who buy so-called premium editions of Windows for the desktop is paying off. In the 10-Q, Microsoft's filing reads, "The OEM premium mix increased eight percentage points to 75% compared with the second quarter of last year." Not so long ago that mix was about 50-50 of premium editions versus standard editions. Then again, not so long ago there was only Windows XP Home Edition, considered "standard," and Windows XP Professional Edition, considered "premium." Then Microsoft added Windows XP Tablet PC Edition and Windows XP Media Center Edition. And on the Windows Vista side, only Windows Vista Home and Windows Vista Home Basic are "standard" editions. Tipping the scales on the "premium" side are Windows Vista Business, Home Premium, Ultimate and Enterprise. Premium editions, obviously, bring more profit to Redmond.

Server Revenues
On the server side, the sales increase is a little lower -- Microsoft had a 12 percent increase in server and server application revenue for the quarter. That's compared to about 18 percent real growth in Windows client revenues. The growth on the server side came primarily from Windows Server and SQL Server, Microsoft stated without providing specifics.

Dynamics Boom
Microsoft Dynamics customer billings were up 26 percent quarter-over-quarter. For the half, Dynamics billings were up 24 percent. Are you seeing results like that in the channel?

Foreign Exchange Rates
Here's one more reason to feel better about your results if they're not matching up to Microsoft's, at least if you do business only in the United States: Like many global corporations, Microsoft benefited from the weak dollar. On server and tools revenue, the company estimated that foreign currency exchange rates accounted for a four percentage point increase in revenues for the quarter. For the Microsoft Business Division, which includes Office, the estimate was a five percentage point increase.

More Microsofties, and Services Activity
If you're bumping into more Microsoft employees around the industry, there's a good reason. In the last year, the company increased headcount by 12 percent overall. Some of those heads wound up in Microsoft Consulting Services. According to the filing, "Consulting, Premier and Professional product support increased $146 million or 28% during the three months." A little algebra puts the total revenues for those activities for the quarter at about $667 million. Microsoft attributes the increase to "higher demand for consulting and support services in corporate enterprises."

Posted by Scott Bekker on January 30, 20080 comments

Help Is On The Way

Under the old language, investors had to hold those securities for a year and could only sell a set percentage of them each quarter after that. The revised rule, announced in mid-November, will allow investors to sell the securities all at once and after just six months. When it takes effect on Feb. 15, the new language will apply to publicly traded companies with less than $700 million in revenues.

According to one lawyer specializing in securities law quoted by the Times, the change will probably bring the most benefit to companies with a market capitalization of less than $100 million. The article also suggests it's good timing for smaller companies with the tightening of the credit markets.

Posted by Scott Bekker on January 30, 20080 comments

SMBs To Get 'Lease-Like' Option on Microsoft Software

Eric Ligman, Microsoft U.S. senior manager, small business community engagement, unveiled the Microsoft Open Value Subscription Program on Tuesday in an entry on the partner-focused Microsoft Small Business Community Blog.

"The Microsoft Open Value Subscription Program provides a way for SMB customers to 'subscribe' to the Microsoft software they want to utilize in their businesses in a 'lease-like' fashion," Ligman wrote.

While Ligman took care to note that the program is not an actual lease, he added, "[Customers] can pay to use the software for a set period of time with the flexibility to increase or decrease in size as their business size does year over year. At the end of the initial term, clients have the options to continue the subscription, buy out the subscription to own the licenses, or to end the subscription."

Ligman did not describe pricing. He will conduct Live Meetings to give partners additional details about the program on Jan. 10, 17, 23 and 29.

The new program is part of the Open Value volume licensing structure for organizations with between five and 250 seats. Resellers will be able to offer Open Value Subscriptions through their current Volume License Distributors, such as Ingram Micro, Tech Data, SYNNEX Information Technologies and D&H Distribution.

The Open Value Subscription Program was previously available only outside the United States and Canada.

Posted by Scott Bekker on January 03, 20080 comments

Top Microsoft Channel Executive Goes to Lenovo

Di Valerio, 45, starts his new job on Dec. 3. He'll report to William Amelio, president and CEO of Lenovo Group Ltd. Di Valerio will be responsible for sales for the Americas. He replaces Rory Read, acting president since January 2007. Read will continue his position as senior vice president for global operations.

Di Valerio's title at Microsoft since November 2005 was corporate vice president of the Original Equipment Manufacturer (OEM) Division, and his duties included overseeing relationships with PC manufacturers, such as Lenovo. He also managed relationships with multinational and regional OEMs and embedded systems manufacturers.

Di Valerio served on the Microsoft Worldwide Partner Leadership Team, a Microsoft subsidiary made up of partner-facing executives from across the company that set strategy and policy direction.

Prior to the OEM role, Di Valerio was corporate vice president of Finance and Administration and chief accounting officer. He had also been Microsoft's corporate controller. Before joining Microsoft, Di Valerio was corporate vice president at The Walt Disney Co., CFO at MindWave Software Inc and a partner at PricewaterhouseCoopers.

James Pickney will serve as the interim leader of the Microsoft OEM Division, working with Bill Veghte, corporate vice president of the Windows Business Group, and COO Kevin Turner.

Posted by Scott Bekker on November 06, 20070 comments