Server sales are booming, researchers at IDC reported Tuesday night, with the third quarter recording the highest total revenue in a single quarter for servers ever.
For those of you looking around at much emptier server rooms than you might remember from a decade ago -- before the financial crisis and other factors pushed the computer hardware market sideways -- it's clearly not the same. As they say, the cloud is just someone else's datacenter, and those someone elses are loading up on hardware.
By the numbers, the server market soared year over year in the third quarter by 38 percent in revenues to $23.4 billion and by 18 percent in shipments to 3.2 million units.
It's the fifth consecutive quarter of double-digit revenue growth, according to IDC.
"The worldwide server market once again generated strong revenue and unit shipment growth due to an ongoing enterprise refresh cycle and continued demand from cloud service providers," said Sebastian Lagana, research manager for Infrastructure Platforms and Technologies at IDC, in a statement. "Enterprise infrastructure requirements from resource intensive next-generation applications support increasingly rich configurations, ensuring average selling prices (ASPs) remain elevated against the year-ago quarter. At the same time, hyperscalers continue to upgrade and expand their datacenter capabilities."
The increases reach across the board -- with volume server revenues up 40 percent to $20 billion, midrange revenue up 39 percent to $2 billion, and high-end systems up 7 percent to $1.3 billion. Dell led the quarter both in revenue and unit shipments, followed in revenues by HPE/New H3C Group, Inspur, Lenovo, IBM and Huawei in a tie, and Cisco. Dell, Inspur, Lenovo and Huawei are up; HPE, IBM and Cisco are down.
But as interesting as the slight jockeying for position among those enterprise vendors may be, it's the largely anonymous manufacturers who are making all the servers powering the hyperscale datacenters that create the Amazon Web Services, Microsoft, Google, Facebook and other clouds that are driving the steadiest growth.
IDC labels those vendors as ODM Direct, for original direct manufacturers who design specifically for a high-scale end customer's specific datacenter needs. Think, for example, about how particular Microsoft is about the system requirements in a modular Azure datacenter. It's not interested in off-the-shelf servers.
That group of ODM Direct vendors accounted for $6.3 billion in collective revenue, a gain of 52 percent year over year, and collectively above Dell's individual $4 billion in revenues.
Another rough way to think about this booming server market is that about one in four new servers are bound for the cloud.
Posted by Scott Bekker on December 12, 2018 at 10:24 AM0 comments
Satya Nadella rolled out a piece of Microsoft math that longtime Microsoft partners are accustomed to hearing, but it's a good message to hear repeated from the top.
Speaking to Forbes in an interview posted Monday, Microsoft's CEO talked about how Microsoft does best when other companies are making money off its products. The comments took the form of recounting conversations with Microsoft Co-Founder Bill Gates.
"Bill used to teach me, 'Every dollar we make, there's got to be five dollars, ten dollars on the outside,'" Nadella told Forbes.
Gates also reminded Nadella that great companies were once built on Microsoft's code, and tasked him with rebuilding Microsoft brick by brick until it can happen again. "That's what I want us to rediscover."
The short article about the interview covers Nadella's efforts to build up enough industry trust in Microsoft to credibly acquire GitHub without causing a community revolt, as well as efforts to reduce the institutional arrogance inside Microsoft that can be a side effect of success.
Read more here.
Posted by Scott Bekker on December 10, 2018 at 10:22 AM0 comments
Riding on Office 365's success, the Microsoft Teams collaborative chat application has raced ahead of the more entrenched Slack.
That's a key takeaway of a recent Spiceworks survey of its community of IT professionals. The firm saw Teams surge seven times in usage share over two years, with the 900 respondents in North America and EMEA projecting another doubling of usage over the next two years.
"The sudden rise of Microsoft Teams is likely influenced by the fact that it's available at no additional cost to Office 365 users," said Peter Tsai, senior technology analyst at Spiceworks, in a statement accompanying the survey results Monday.
According to the Spiceworks survey, Microsoft's own Skype for Business has the biggest share at 44 percent. However, Slack-versus-Teams is the high-profile battleground, and in just two years since its launch, Teams has vaulted ahead according to the survey. Teams is now at 21 percent share, up from 3 percent in 2016. Slack is at 15 percent, up from 13 percent two years ago.
Looking ahead to the end of 2020, 53 percent of users expect to be using Skype for Business, 41 percent expect to be using Teams, 18 percent expect to be using Slack and 12 percent expect to be using Google Hangouts.
"Although Skype for Business has maintained the lead overall, Microsoft is putting more of an emphasis on Microsoft Teams as the default communications app for Office 365, which is enticing organizations to give it a try. As a result, we'll likely see Teams adoption rates double in the next couple years," Tsai said.
The survey found that overall usage of chat apps is increasing among businesses, with usage up 20 percentage points to 62 percent this year compared to 2016. At the same time, the expectation that chat apps will supplant e-mail is down among IT pros to 16 percent from 25 percent two years ago.
As they shift to Teams, organizations seem to be trading innovation and usability for security. Survey respondents found Slack the most innovative. They ranked Teams fourth for reliability, compatibility and user-friendliness, behind Skype for Business, Slack and Google Hangouts, respectively. But Teams was viewed as the leader for security, manageability and cost-effectiveness.
Posted by Scott Bekker on December 10, 2018 at 12:25 PM0 comments
If it seems like Microsoft provides two or three different Azure services to accomplish any task, that's probably because, in a lot of cases, it's true.
For the emerging area of Internet of Things (IoT), developers face a confusing array of choices in a few different areas within the Azure catalog of services. As part of a session at the Live! 360 conference in Orlando this week, Eric Boyd offered attendees some guidance on a couple of key architectural questions.
Boyd, the founder and CEO of responsiveX and a Microsoft Azure MVP and Microsoft Regional Director, has spent time the last few years experimenting with a burgeoning collection of IoT devices and components in his home and with the ways he can use Azure services to light up and connect the devices.
From watching his enthusiasm during a running demo throughout his presentation with a Raspberry Pi, you could tell he's been doing it partly because it's fun. The larger purpose has been getting to know the technology so well that he can help his clients figure out how to implement IoT in meaningful ways.
"What the IoT is all about is not tinkering and building the Raspberry Pi. It's about taking all the everyday things in our life and connecting them," Boyd said. "IoT is the new norm. This is just like Web and mobile. It is just the way now. It's certainly something that a lot of you should be thinking about as you look out at devices on your factory floor or agricultural scenarios."
Connecting those devices is where Azure comes in, and the services can be overwhelming. For example, when it comes to messaging, a developer might be confused by the options of Service Bus, Event Hubs or IoT Hub. All can be, and have been, used in IoT solutions. Boyd offered a succinct overview in his session.
"OK, there are all these messaging services in Azure. When do I use which service?" Boyd asked. "IoT Hub is built on Event Hubs. If you don't have a scenario where you have devices -- and I use that term loosely because that can mean a lot of things, but if you have applications where you're wanting to stream data in -- Event Hubs is the better solution for you. If you have devices, then IoT Hub is the right fit. We did IoT before IoT Hub in Azure using things like Service Bus. We built a massive kiosk network in Azure that you guys have all been customers of. But IoT Hub simplifies things [for IoT scenarios]."
Boyd also offered a way to think about the difference between IoT Central and IoT solution accelerators, two different services in the Azure catalog both intended for developers getting started with IoT. Both can get you up and running quickly, but IoT Central is more limiting. "It probably isn't your long-term strategy," Boyd explained.
"Azure IoT Central is a SaaS service. You can think of it like Office 365 for IoT. You can just go spin up a service really quickly without having to think about code. It's not a bad service. If you want to just kick the tires and prove something out and demo it to your executive group, it's great for that. It may be a good service to go pilot some things, as well," he said.
You can also get off to a quick start with the IoT solution accelerators, but those are much better as a starting point for an enterprise solution, he explained. The accelerators automatically spin up various IoT-related services for canonical, pre-built scenarios, including remote monitoring, connected factory, predictive maintenance or device simulation.
"This looks similar, but it's not the same," Boyd said of the accelerators in comparison to IoT Central. "You can modify it, redeploy it. The code for this dashboard, unlike IoT Central, is available to you, so you can tweak and customize it however you need it."
Posted by Scott Bekker on December 06, 2018 at 10:05 AM0 comments
A Microsoft program manager this week gave some insight into the ways that artificial intelligence (AI) capabilities are shaping the Microsoft stack -- sometimes in surprising ways.
Pranav Rastogi, who led Tuesday's keynote of the inaugural Artificial Intelligence Live! track at the Live! 360 conference, is one of the people inside Microsoft helping drive those capabilities and technologies across the company's vast array of products. Rastogi provided attendees with an overview of what those technologies are and where they're starting to emerge in products.
"The idea here is really to democratize AI for each and every employee so that it's available and employees can use it to transform their own businesses," Rastogi told an audience of several hundred attendees at the Orlando conference.
During his hour-long talk, Rastogi provided a tour of AI technologies that can immediately be leveraged by developers, end user and business analysts. To date, AI has mostly been the domain of data scientists. Rastogi's discussion dealt with the other user profiles who may not think of themselves as potential users of AI right now. An example was a slide labeled, "Introducing the Citizen Data Scientist."
All of the AI technologies he highlighted fit into a bucket that Data Relish Ltd. Principal Jen Stirrup, another speaker at the conference, described Tuesday as the types of machine learning capabilities that are commonly coming online right now -- training computers to do a single task at roughly a human level of proficiency. That's as opposed to the strong AI of self-directed fictional scenarios like R2-D2 in "Star Wars," Skynet in "The Terminator" or HAL 9000 in "2001."
For Microsoft, the AI democratization journey has three phases. First is infusing every Microsoft application with some AI capabilities so that early adopter customers can leverage the technologies if they're looking for them. The second phase involves bringing AI to every business process, which would mean driving adoption among users both through increased ease of use and raising awareness of the vertical and horizontal benefits of using Microsoft's tools. The final phase is getting every employee at all of Microsoft's customers using the AI capabilities in some way.
The "every application" phase is in the early stages but spreading quickly across many products, making the effort already broad, if not particularly deep. As an example, Rastogi showed how Microsoft is redefining existing applications with AI using the pre-built AI services, such as Vision, Speech, Language and Search. Those capabilities are being used to create new conversational experiences inside other applications like Microsoft's own Cortana, Office and Skype, as well as other applications like Slack, Facebook Messenger and Kik Messenger.
Rastogi also showed how dense the company's flagship AI platform, Azure, is getting with machine learning capabilities. At the first level are the sophisticated pre-trained models that are ready to be called from within other applications, such as the Vision, Speech, Language and Search services mentioned earlier. The lengthy list of Azure services also includes a few designed to help data science and development teams, such as Azure DataBricks, Azure Machine Learning and Machine Learning VMs. Additionally, Rastogi highlighted the Azure options for using AI-optimized hardware in Microsoft's datacenters, and for having the compute performed in the cloud, on-premises or at the edge.
The product set where the "AI everywhere" story appears strongest is in Power BI, Microsoft's business intelligence platform for accessing, manipulating and visualizing data. A product that essentially aimed to democratize BI is now evolving to do the same for AI, as well. There are capabilities for data scientists, certainly, including Power Query integration for Azure Machine Learning and integrations with Azure frameworks. Data scientists and BI professionals can also script in R or Python or create machine learning models via clicking.
But end users also have ways to explore AI through Power BI, using Natural Language exploration. Examples of the types of things that end users or business analysts can leverage in Power BI include sentiment analysis, key-phrase extraction, optical character recognition and text translation.
Most of the AI capabilities Microsoft enables today still require a lot of leading-edge expertise, integration, development work and data science expertise. Yet it's clear that Microsoft is working rapidly to integrate those technologies all the way out to end-user-facing applications and will continue to push hard in that direction.
Posted by Scott Bekker on December 05, 2018 at 9:42 AM0 comments
A major focus of this week's Live! 360 conference in Orlando, Fla., will be artificial intelligence (AI) and its impact on Microsoft-focused developers and IT professionals.
Live! 360 is hosted by Converge360, the parent company of RCPmag.com, and brings together Converge360's events for one combined conference, with each event as a track. In addition to Visual Studio Live!, SQL Server Live!, TechMentor, Office & SharePoint Live! and ModernApps Live!, this year the conference is rolling out an entire Artificial Intelligence Live! track.
"We are excited about the AI Live launch and how that ties in nicely with our overall program of incubating new topics at Live! 360 and giving the Live! 360 attendees the opportunity to broaden their educational reach and knowledge base by attending any sessions across the six events," said Brent Sutton, vice president of Converge360 Events.
Headlining the AI track is a Tuesday morning keynote from Pranav Rastogi, a program manager at Microsoft who focuses on making developers successful with AI. His keynote is "Enabling Enterprise Developers in AI -- How Microsoft is Doing It." AI has been a huge messaging push for Microsoft over the last year and a half, and Rastogi is expected to talk about Microsoft technologies that support AI projects, as well as how Microsoft is using the approaches internally and in customer implementations.
Andrew Brust, conference co-chair for the Artificial Intelligence Live! track, as well as for the Visual Studio and SQL Server tracks, says the Live! 360 AI content will reflect the conference's roots in giving developers practical guidance.
"Most of the AI conferences out there are really like data science conferences. We will have that content, but not only that. Because it's VS Live!, we will have content for developers [about AI bots and features]," Brust said. "It's AI aimed at developers rather than AI aimed at AI specialists."
One example of the type of content that Live! 360 specializes in is being run by Brust, and will cover new AI features that Microsoft has just integrated into Power BI and how to make use of those capabilities. Another is a workshop by experienced BI expert Jen Stirrup on how BI professionals can transition into AI.
The main technology keynote for all conference tracks is on Wednesday, when Donovan Brown, the Principal DevOps Manager at Microsoft's Cloud Developer Advocacy Team, presents on "Enterprise Transformation." The talk will focus on the transition of Microsoft Visual Studio Team Services from a three-year waterfall delivery cycle to three-week iterations, open source elements and the Git Virtual File System.
Also Wednesday, James Montemagno, Microsoft Principal Program Manager in the Mobile Developer Tools unit, is scheduled to deliver an authoritative session on the future of .NET and Visual Studio.
Some of the other major technologies and themes being addressed by the more than 100 expert speakers this year include containers and the Azure Kubernetes Service, Azure Cosmos DB, PowerApps, Microsoft Flow, Windows Server 2019, Windows 10 updates, Microsoft Graph, Internet of Things (IoT) and Office 365 security.
Posted by Scott Bekker on December 03, 2018 at 9:50 AM0 comments
Microsoft is taking FastTrack on a world tour to raise the profile of the cloud onboarding service with tech professionals and developers.
Microsoft and partners have a love-hate relationship with FastTrack. Microsoft loves the program because it helps boost consumption of cloud services, a key metric for the company and a critical goal for retaining subscriptions to Office 365 and other cloud services. Partners often counter that the program zeroes-out formerly profitable routine migration services, while still devaluing in customers' eyes the more complicated migrations that partners must take over when the FastTrack desk's remote and automated capabilities fall short.
Microsoft defines FastTrack as a "customer success service." In three years, as of September, Microsoft claims to have onboarded 40,000 customers and migrated more than 6.5 petabytes of data through the service, which is included in the price of Microsoft cloud subscriptions.
The company had a big presence for FastTrack at the Microsoft Ignite show in September, with an expo presence and more than 20 FastTrack-related sessions. Next month, Microsoft begins a 17-city tour to bring Ignite material to customers around the world, and the FastTrack team is among the most enthusiastic Microsoft groups participating in the tour.
The free, two-day Microsoft Ignite | The Tour sessions kick off in December in Berlin and São Paulo. Next year, the tour will hit Toronto; Singapore; Tel Aviv; Johannesburg; Milan; Washington, D.C.; Sydney; Hong Kong; London; Amsterdam; Dubai; Seoul; Mexico City; and Stockholm before wrapping up in Mumbai in late May.
In the condensed context of Microsoft Ignite | The Tour, the FastTrack elements will include 15-minute theater sessions and breakout sessions with an emphasis on deploying Microsoft 365 products, and details about the app remediation services of Desktop App Assure.
Posted by Scott Bekker on November 26, 2018 at 11:36 AM0 comments
When stocks in the tech sector were rising, Apple and Amazon both drove the trend and benefited from it, reaching market caps over $1 trillion, with Microsoft and Alphabet close behind.
Now that the tech sector is falling along with markets overall, Microsoft is falling less quickly.
In mid-day trading Monday, Microsoft surpassed Apple as the most valuable company in the United States. Microsoft's market capitalization was $812 billion, about $1 billion higher than Apple's.
News has been rough for Apple over the last few weeks, with the stock losing nearly a quarter of its value since a September high on reports of drops in smartphone demand. Microsoft, on the other hand, continues to deliver on its pivot from a Windows-first to a cloud-first business.
Even though Microsoft seems to have regained supremacy from Apple on this one business measure (for the moment, at least), Microsoft stock is nearly 9 percent off its record high from early October.
Posted by Scott Bekker on November 26, 2018 at 11:29 AM0 comments
An acquisition this week by Microsoft should result in new resources for partners interested in building conversational artificial intelligence (AI) experiences.
Microsoft on Wednesday announced it had signed an agreement to acquire XOXCO, based in Austin, Texas. Like most of the dozen-plus acquisitions Microsoft makes each year, terms weren't disclosed, which usually indicates a fairly small company and a small team.
In a blog post about the deal, Lili Cheng, Microsoft corporate vice president for Conversational AI at Microsoft, described XOXCO as "a software product design and development studio known for its conversational AI and bot development capabilities." Cheng cited examples of XOXCO's previous work, including Howdy, a meeting scheduling bot for Slack; and Botkit, a set of development tools that is popular on GitHub.
"We have shared goals to foster a community of startups and innovators, share best practices and continue to amplify our focus on conversational AI, as well as to develop tools for empowering people to create experiences that do more with speech and language," Cheng wrote.
Given Microsoft's sizable internal investments over the last few years on the digital personal assistant Cortana, the Microsoft Bot Framework, natural language processing and other AI-related services, it's unclear from the brief blog post how much new capability XOXCO brings to the company. However, Cheng notes that Microsoft has partnered with XOXCO on projects over the last few years.
One area that will be interesting to watch is how XOXCO plays into Microsoft's ongoing effort to push Teams as a competitor to Slack. The XOXCO Web site is currently replete with references to Slack, and a $1.5 million funding round three years ago was all about developing for Slack.
As one of the early movers in the Slack commercial ecosystem, will XOXCO become a Microsoft effort to have a presence on that platform, or will the team's expertise be redirected to building bots, tools and add-ons for Teams exclusively?
Posted by Scott Bekker on November 14, 2018 at 12:15 PM0 comments
SherWeb is bundling some add-on solutions for Office 365 at the same base price as the underlying Microsoft cloud service to give managed service providers (MSPs) a more complete offering for customers out of the gate.
SherWeb is one of the Indirect Providers in the Microsoft Cloud Solution Provider (CSP) program, sitting between Microsoft and CSP Indirect Resellers, who sell Microsoft cloud products to customers.
The Sherbrooke, Quebec-based company unveiled the new Office 365 bundle on Wednesday, which adds security, backup and e-learning components to base Microsoft offerings, such as Office 365 or Microsoft 365.
The products include Office Protect, a one-click threat protection solution using best practice security settings; Online Backup, a backup service of 1GB per user for data and Office 365 mailboxes; and QuickHelp, which is a personalized e-learning platform designed to increase Office 365 user adoption and productivity for customers.
Plans that the Office 365 bundle comes with include Office 365 Business Premium, Office 365 Business Essentials, Office 365 Enterprise E1/E3/E5, Microsoft 365 Business and Microsoft 365 E1/E3.
In a statement, Jason Brown, vice president of products for SherWeb, declared the new offering the core Office 365 bundle from SherWeb.
"We see this as an evolution of Office 365 for partners in adding more value and providing them with the opportunity to create new products and services, and complement their managed services business," Brown said.
Posted by Scott Bekker on November 07, 2018 at 9:51 AM0 comments
Sometimes a customer is so big, and the engagement so broad, that Microsoft refers to the customer and the deal as a partnership. One such case is the Walmart deal unveiled over the summer, and details of the arrangement are starting to come into focus.
The companies announced a five-year agreement in July that included Walmart engaging in digital transformation projects with Microsoft and committing to enterprisewide use of Microsoft Azure cloud services and Microsoft 365, the end user package that includes Office 365, Windows 10 and Enterprise Mobility + Security (EMS) functionality.
As one of the first steps in the agreement, the companies on Monday unveiled that they would be jointly staffing a "cloud factory," basically an expansion of Walmart's existing technology center in Austin, Texas, early next year. In all there will be 30 technologists in the office, which will include an undisclosed number of Microsoft engineers mixed in with the Walmart technology specialists. Walmart is headquartered 550 miles away in Bentonville, Ark., but maintains the technology center in Texas to tap into Austin's vibrant tech community.
"With this partnership with Microsoft, we started talking, 'Hey, what's the best way to accelerate all the stuff we're doing here? We need help and expertise. We want to move fast. How do we partner our smart people with Microsoft's smart people?'" said Clay Johnson, Walmart executive vice president and enterprise chief information officer, in a Q&A that posted on Microsoft's site on Monday.
"Then it was obvious: 'Why don't we just co-locate the teams together.' We haven't done something like this before with co-location, but I think the outcomes are going to be huge and strengthen our partnership even more. You're going to see a lot more co-innovation around IoT, computer vision, big data and real-time analytics," Johnson said. "We're going to learn a lot from each other. We're going to learn a lot from Microsoft -- which apps make sense to get to the cloud quickly and which don't."
The cloud factory's assignment includes a lot of the types of projects Microsoft has been routinely encouraging customers to undertake. In the lift-and-shift category, they'll be migrating thousands of internal Walmart business applications to Azure. The team will also be building new, cloud-native applications.
Beyond modernizing applications into the Azure cloud platform, the collaboration will include work on emerging technologies. For one thing, Walmart already has Internet of Things (IoT) sensors in a lot of locations.
"With our IoT work and sensor enablement, we're looking at our energy consumption and other factors to predict equipment failures before they happen. Improving equipment performance can result in enhanced energy efficiency, which lowers costs and our carbon footprint," Johnson said. "Putting IoT data into edge analytics lets us look at data at a store level and backhaul it to Azure to look at it across a region or the whole U.S. We started talking to Microsoft about this concept of a set of stores being a 'micro-cloud,' and you roll them into Azure for data analytics and insights."
Artificial intelligence (AI), chatbots and natural language processing -- three more hot areas of digital transformation -- will also get tested at a massive scale in the Walmart environment, spearheaded by the Austin-based joint team.
Projects will include internal chatbots designed to help Walmart's 2.2 million employees navigate benefits, chatbots for managing supplier interactions, and natural language processing of terabytes of unstructured text to improve business operations.
"Microsoft's going to get to see stuff at a scale they've never seen before," Johnson said of the Walmart environment. The retailer had $500 billion in revenues in fiscal 2018 and operates 11,200 stores worldwide. "I think they'll learn a lot from our footprint. Co-locating top engineers from both companies will deepen the technical brainpower for creating disruptive, large-scale enterprise solutions for Walmart."
Posted by Scott Bekker on November 05, 2018 at 1:10 PM0 comments
During the special RCP editorial webcast Wednesday on "What's Next for Microsoft CSPs: Partners' Top Moves for 2019," the attendees had more great questions than we could answer during the session. I want to hit on a few of them here, as well as provide some better answers for some of the questions we did address.
For those of you who didn't attend the live event, the presentation centered on 11 key decisions that Microsoft partners need to make in 2019 and early 2020 around their participation in the Microsoft Cloud Solution Provider (CSP) program. A few highlights involved making the Direct Bill versus Indirect Reseller decision based on the new support plan purchase requirement, selecting among Indirect Providers if you go that route, whether to chase certain incentive,s and how much to emphasize developing your own intellectual property (hint: a lot). A replay of the session is now available here.
First, let's look at a few questions that we covered in the session, but that I have a little more detail about.
Do you know how a partner can switch easily from being a Direct provider to being an Indirect Provider?
Since much of the session focused on the new expenses around being a Direct Bill CSP partner, and whether it's time to consider switching to being an Indirect Reseller, one really good question that came up was about how difficult it would be to switch. I have a consultant's answer on this one: It depends.
Mainly, it has to do with how much the partner already invested in the infrastructure required to become a direct partner, the ongoing expenses of being a direct partner, how many customers the partner has under the model and how their contracts are structured. All that aside, all of the Indirect Providers are extremely aware of this opportunity and many have competitive programs to help Direct partners make the switch into their Indirect programs.
One thing that I didn't mention Wednesday that was brought up by an Indirect Provider participant in an e-mail exchange after the call is to think of it as a process. Expect that customers will move from one model to the other at different rates.
Can you do Indirect for Azure and Direct for everything else?
A related question was about mixing and matching the CSP business models. I wasn't entirely sure until pretty late in the call about the answer to this question. A Microsoft rep attending the call kindly confirmed that partners can be both Direct and Indirect. To clarify, it's not just Azure for Indirect and everything else for Direct. You can do Dynamics, Azure, Office 365 or any of the CSP products in whichever model suits your business.
Do you have rough figures for the price of ASfP or PSfP?
The new requirement that Direct Bill CSPs pay for a support package involves an annual expense, either for Advanced Support for Partners (ASfP) or for Premier Support for Partners (PSfP). There was a question about how much each package costs. ASfP is the less expensive option at about $15,000 a year in the United States. It costs less in some geographies. PSfP is much more customizable, but Microsoft documentation shows it starting at nearly twice the price, about $28,000 in the United States. The Microsoft rep also provided this link to a partner comparison page for the service plans.
Next, there were a few questions that I completely missed in the Q&A session.
Can you describe what makes up the investment costs for Direct CSP? I've seen this ROI slide before, but what exactly are partners spending $50,000 to $1 million on?
The reference to the ROI slide was a Microsoft slide that shows how the time to profitability for Direct averages about 22 months, while Indirect is about five months. The question is about an estimated cost that Direct partners tend to spend $50,000 to $1 million. As far as I know, the source for those investment figures is an IDC e-book sponsored by Microsoft called "Partner Choice for Cloud Success: What IT Solution Providers Need to Know about the Value of Microsoft's CSP Licensing Program and the Choice of Relationship Models."
The IDC e-book describes the investments as consisting of several things. One is building a billing and provisioning model using the Microsoft APIs or paying a third-party platform for a white-label version. Another is building first-level customer support capabilities, including hiring support professionals. It can also include either building out a customer-facing cloud marketplace or paying a third-party provider to use a marketplace platform. The range is so large because it goes from managed service providers who may already have some of those capabilities in place to distribution partners who are setting themselves up to be Indirect Providers with their own networks of Indirect Resellers.
Note that the e-book predates the requirement for Direct CSPs to buy support packages.
Which margins are moving from 8 percent to 6 percent?
My slide deck focused a little too much on using the Halloween-related Chiller font in an effort to be entertaining and not enough on the relevant details. Sorry about that. I was talking in that slide about the change coming to the incentive rates for Core Office 365 for Indirect Resellers, starting in January. That rate was 8 percent paid on billed revenue from July through December. It will be 6 percent from January 2019 to June 2019.
Finally, there were a handful of questions that came in through the console that I didn't tackle because I didn't know the answer. I'll be looking into these over the next few weeks. If you have any thoughts or information about them, let me know at firstname.lastname@example.org.
- How are CSPs managing cash flow risk? I.e., end client does not pay, Microsoft is still owed?
- I thought the 10 percent incentive on Azure RI has gone. Can you provide the Microsoft reference doc around that?
- Our company has ASfP. It's been very difficult opening tickets that are routed to the right support engineers at Microsoft. Does anyone have the proper way to open advance or premium support tickets?
Thanks to SherWeb for sponsoring Wednesday's session and to everyone who participated! Again, check it out here if you missed it. Looking forward to keeping the conversation going about this critical and evolving partner program.
Posted by Scott Bekker on November 01, 2018 at 2:13 PM0 comments