Boom Times for Servers, But PCs and Smartphones Shrink

The PC and smartphone markets stumbled in 2017 even while servers went on a tear, according to recent data from market researcher IDC.

With most of the publicly traded vendor companies having already released their quarterly financial reports (with all those reports' attendant clues), IDC released a slew of research this week recapping the fourth quarter.

Server market revenues jumped 26 percent year over year to $20.7 billion in the fourth quarter. IDC attributed the momentum to several factors, such as traction for the Purley-based offerings from Intel and the EPYC-based offerings from AMD. The overall server market showed some signs of life, as well, with server shipments increasing nearly 11 percent to 2.84 million units for the quarter.

Yet the factor propping up the server market overall remains the shift in computing from distributed at client sites to centralized at megavendor datacenters.

"Hyperscalers remained a central driver of volume demand in the fourth quarter with leaders such as Amazon, Facebook, and Google continuing their datacenter expansions and updates," said Sanjay Medvitz, senior research analyst for servers and storage at IDC, in a statement. "ODMs [original design manufacturers] continue to be the primary beneficiaries from hyperscale server demand. Some OEMs are also finding growth in this area, but the competitive dynamic of this market has also driven many OEMs such as HPE to focus on the enterprise."

By manufacturer, the HPE/New H3C Group joint venture was tied with Dell for the quarterly revenue lead, followed by IBM, Lenovo and Cisco. Taken as a group, ODM Direct vendors had a slightly bigger share of revenues than either of the leaders.

[Click on image for larger view.]

The picture for personal computing devices, which IDC defines as desktops, notebooks, slates and detachables, wasn't as positive. IDC is projecting that for the full year of 2017, shipments within the sector declined 2.7 percent. IDC published forecasts out through 2022, and expects compound annual growth for the entire sector to be a paltry 0.1 percent over the period. Short-term, IDC is looking for another drop in 2018 of a little more than 3 percent, with slight pickups thereafter due to corporate refresh cycles, and the ongoing popularity of detachables like the Microsoft Surface.

As for smartphones, IDC reports that 2017 marks the first year-over-year decline for the devices, which are now in a two-horse race between Android and iOS. The 1.46 billion devices that IDC estimates shipped in 2017 represented a half-a-percent drop in volume compared to 2016. Through 2022, IDC forecasts a compound annual growth rate of a little under 3 percent.

Posted by Scott Bekker on March 02, 2018 at 9:40 AM0 comments


Microsoft Makes Its Case for E-Mail Privacy to Supreme Court: A Recap

The years-long tangle between Microsoft and U.S. regulators regarding the extent to which the tech giant can legally protect its customers' privacy against government data requests came to a head on Tuesday.

In a lively one-hour discussion, U.S. Supreme Court justices sparred with lawyers from Microsoft and the U.S. government, covering topics from ranging from privacy rights to latency issues to robots conducting overseas seizures.

At the center of the debate was the question of whether a U.S. court can order a U.S.-based e-mail service provider to comply with a probable-cause-based warrant issued under the 1986 Stored Communications Act (SCA) by disclosing e-mails that the provider has stored abroad.

State of play leading up to the Supreme Court has Microsoft ahead and playing defense. The case started with a Drug Enforcement Agency investigation in 2013. Federal agents persuaded a magistrate judge in the Southern District of New York to issue a warrant for a suspect's e-mails. Microsoft fought the order on the grounds that the e-mails were stored at its datacenter in Ireland. A U.S. District Court rejected Microsoft's appeal, but the U.S. Court of Appeals for the 2nd District ruled in Microsoft's favor.

Discussion on Tuesday settled over and over on a few key topics: the many ways that the outdated SCA is woefully inadequate for the cloud era; whether the court should simply wait for pending congressional legislation to make the questions in the case moot; justices seeking clarification on what exactly happens in the United States and abroad when Microsoft or other service providers produce an e-mail record; domestic versus extraterritorial jurisdiction questions; and back-and-forth about the legal differences between warrants, subpoenas, orders, searches and disclosures.

What Microsoft wants is for the Supreme Court to leave the issue alone and to hope that Congress passes the CLOUD Act, introduced recently with bipartisan and tech industry support.

"There were conversations about where the Internet is headed," Microsoft lawyer E. Joshua Rosenkranz said Tuesday in his closing statement. "There [are] conversations about whether this will kill the tech sector, how much of an international consensus there is about the sovereignty of data. These are all questions that only Congress can answer. Meanwhile, this Court's job is to defer, to defer to Congress to take the path that is least likely to create international tensions. And if you try to tinker with this, without the tools that -- that only Congress has, you are as likely to break the cloud as you are to fix it." (Ed.'s note: All quotations in this article are taken from the 72-page official transcript posted on the Supreme Court's Web site.)

Arguing for the government, Michael R. Dreeben, deputy solicitor general for the U.S. Department of Justice, countered that the court should move before Congress to fix an unsettled legal environment.

Calling Microsoft's position "radical," Dreeben described the current situation as one where no U.S. court gets to try to balance U.S. law with other countries' relevant laws. "If the data is stored overseas, we're just out of luck. We can't even ask a court for an order that would require its production," Dreeben said.

"No other court that has issued a written opinion since Microsoft has agreed with the Second Circuit. And the Second Circuit's decision has caused grave and immediate harm to the government's ability to
enforce federal criminal law," Dreeben argued.

He also urged the court not to wait for the CLOUD Act: "But as to the question about the CLOUD Act, as it's called, it has been introduced. It's not been marked up by any committee. It has not been voted on by any committee. And it certainly has not yet been enacted into law."

Predicting how justices will decide from the questions they ask in oral arguments is tricky, but there were some hints. Running through the justices in rough order from the liberal to the conservative end of the spectrum:

Justice Sonia Sotomayor asked Dreeben outright why the court shouldn't wait for Congress. "Why shouldn't we leave the status quo as it is and let Congress pass a bill in this new age?" Sotomayor also participated with several of the justices in lengthy exchanges to understand better how Microsoft would technically go about complying with an order to produce e-mails from a U.S. office that are stored in a datacenter in Ireland. At one point, Rosenkranz described the process as similar to dispatching a robot, saying, "If you sent a robot into a foreign land to seize evidence, it would certainly implicate foreign interests." Shortly after that description, Sotomayor joked, "I'm sorry...I guess my imagination is running wild."

Justice Ruth Bader Ginsburg offered similar thoughts on leaving action to Congress: "[In] 1986, no one ever heard of clouds. This kind of storage didn't exist. ... Wouldn't it be wiser just to say let's leave things as they are; if -- if Congress wants to regulate in this brave new world, it should do it?"

Justice Elena Kagan's questions were relatively technical, covering issues around whether judges could weigh other countries' laws in deciding on challenges to warrants, and discussing legislators' intent for specific provisions of the SCA.

Justice Stephen Breyer sought a short-circuit for the whole issue in trying to pin down whether Magistrate Court judges had authority to issue warrants for searches outside their geographic districts -- in this case, New York. "I suspect [that] it just can't be that easy, this case," Breyer said during a light moment in the arguments. Breyer also asked about the feasibility of a middle path involving reading the old statute to adapt to the current cloud environment.

Justice Anthony Kennedy wondered why the discussion about location wasn't broader. "Why should we have a binary choice between a focus on the location of the data and the location of the disclosure? Aren't there some other factors, where the owner of the e-mail lives or where the service provider has its headquarters?"

Justice Samuel Alito came down pretty heavily on the side of action -- the government's preferred position. "It would be good if Congress enacted legislation that modernized this, but in the interim, something has to be done," Alito said. Meanwhile, another question Alito asked established definitively that the nationality of the suspect in the case was not known, which may influence Kennedy's thinking based on his questions about locations. Alito also pressed Microsoft's Rosenkranz about what would happen in a case involving American citizens being investigated for crimes committed in the United States if their service providers store their e-mails outside the country.

Chief Justice John Roberts expressed deep reservations about service providers intentionally using the current legal standard to assist customers in avoiding U.S. investigators.

"There is nothing under your position that prevents Microsoft from storing United States communications, every one of them, either in Canada or Mexico or anywhere else, and then telling their customers: Don't worry if the government wants to get access to your communications; they won't be able to, unless they go through this MLAT [Mutual Legal Assistance Treaties] procedure, which is costly and time-consuming," he said. "Could you provide that service to your customers?"

In a give-and-take discussion, Rosenkranz assured Roberts that Microsoft's motives solely involved customer demands for minimizing latency, which he positioned as the sole reason for Microsoft's investment in half-billion-dollar datacenters all around the world. Roberts did not sound convinced, "Well, but you might gain customers if you can assure them, no matter what happens, the government won't be able to get access to their e-mails."

Justice Neil Gorsuch also seemed to stick to technical questions on subjects like the chain of activity in complying with a court order and the differences between subpoenas and warrants. At one point, Justice Breyer seemed to indicate to Dreeben that Gorsuch and others were "with you on this" but it was unclear exactly what Breyer was talking about.

Justice Clarence Thomas provided no clues as to his thinking during the oral arguments. He upheld his standard practice of asking no questions.

So the quick scorecard from this close read of the transcript is Sotomayor and Ginsburg leaning toward waiting for Congress, Alito and Roberts inclined to act, and the other five justices on the fence. Stay tuned for the decision in June.

Posted by Scott Bekker on February 28, 2018 at 9:09 AM0 comments


Schuster: AI a Big Focus at Microsoft Inspire

Expect to hear a lot about artificial intelligence (AI) at Microsoft Inspire, the company's annual July partner confab being held this year in Las Vegas.

Gavriella Schuster, corporate vice president for Microsoft One Commercial Partner (OCP), talked about Inspire in an interview posted this week on Vince Menzione's "Ultimate Guide to Partnering" webcast.

"The hottest topic at Inspire is probably going to be all about our data service and how to unlock that through artificial intelligence. That is clearly what all of our partners want to learn more about. It's what all of our customer engagements are about and every single one of our partners is buildings some sort of a data service, AI service, into their applications of the service that they deliver. That will be the theme of the whole event," Schuster told Menzione.

Schuster and her team at Microsoft made clear earlier this year that AI would be a major area of emphasis for partners in calendar year 2018.

On Jan. 24, Microsoft launched an AI Practice Development Playbook for partners. Based on detailed input from a dozen early-adopter partners and a survey of another 550 partners, the 144-page playbook goes through the basics of defining strategy, building a team, operationalizing a practice, going to market and closing deals.

Microsoft's intention with the playbook is to give its sizable partner base clear guidance on starting up AI practices, which would help Microsoft grab AI mindshare in what IDC calls a "Battle of AI Platforms" between Amazon, Google, IBM and Microsoft.

"Partners can build a roadmap that helps customers layer in sophisticated AI capabilities with minimal training," wrote Melissa Mulholland, cloud profitability lead for Microsoft, in the blog post introducing the playbook. The end game, she suggested, was for partners to "use AI technologies pragmatically to differentiate their current services, so they can re-engage customers with enhanced end-to-end systems that learn from data to deliver new insights and efficiencies."

In Schuster's interview this week, she suggested that, in keeping with the main idea of Inspire as a conference, hearing about AI successes and best practices would get partners thinking. "The more you hear about what partners are doing today and about what customers are doing, the more it sparks your imagination of what's possible and how to bring these different elements of the technology together," she said.

According to IDC analyst Steve White, that's probably the appropriate messaging for the current state of the AI opportunity. "AI is currently what cloud was a number of years ago," White said in an interview. "It's really, really interesting. It's going to be big in the future. Customers are going to be interested, but we haven't turned the corner yet on it. If you are an analytics partner, it should be an easy add. Those playbooks that Microsoft built are detailed. If you want to make that dive into it, they're a great place to start."

Posted by Scott Bekker on February 28, 2018 at 9:46 AM0 comments


Researchers Identify Suspected North Korean Cyber-Espionage Group

A discrete cyber-espionage group operating on behalf of North Korea is responsible for a years-long series of cyberattacks, security researchers at FireEye said this week.

FireEye dubbed the group APT37 in its report, "APT37 (Reaper): The Overlooked North Korean Actor." The report connects APT37 to other attacks dating back to 2014, including the recent zero-day vulnerability CVE-2018-4878 that was disclosed on Feb. 1. Successful exploitation of that Adobe Flash Player vulnerability could allow an attacker to take control of an affected system.

FireEye's report ties that vulnerability to activities reported by other researchers, including Kaspersky Lab, which identified a group of attackers as ScarCruft, and Cisco's Talos unit, which identified the activities of a Group 123. The FireEye report goes further in pinpointing the group's origin as North Korea.

"We assess with high confidence that this activity is carried out on behalf of the North Korean government given malware development artifacts and targeting that aligns with North Korean state interests," FireEye wrote in the introduction to the report.

"We judge that APT37's primary mission is covert intelligence gathering in support of North Korea's strategic military, political and economic interests. This is based on consistent targeting of South Korean public and private entities and social engineering. APT37's recently expanded targeting scope also appears to have direct relevance to North Korea's strategic interests."

What's interesting about the report is that FireEye views APT37 as separate from the internationally isolated country's main suspected cyber-espionage and operations unit, which researchers call Lazarus. According to FireEye, the capabilities of APT37 are increasing, the unit's international scope of operations is expanding, and the group is likely to become another tool in North Korea's global cyber-operations arsenal.

Posted by Scott Bekker on February 21, 2018 at 11:57 AM0 comments


Huddleston Joins Twilio

Ron Huddleston is joining cloud communications platform company Twilio as chief partners officer, the San Francisco-based company announced Monday.

Huddleston, who ran Microsoft's One Commercial Partner organization from its creation a year ago until going on what Microsoft officially described as an indefinite family leave two months ago, will be tasked with building out an ecosystem for ISVs, systems integrators and resellers at Twilio, a 10-year-old company that went public in June 2016.

"Ron's experience is unparalleled when it comes to building a thriving partner ecosystem and I look forward to him accelerating Twilio's momentum across all partner business models, geographies, and the enterprise opportunity," Twilio COO George Hu said in a statement. Huddleston helped build a developer-focused channel at Salesforce around AppExchange and previously held senior channel roles at Oracle.

"Twilio has the potential to revolutionize the communications industry in the same way cloud computing redefined the software industry. This is a massive opportunity for all types of partners to build new fast-growing businesses and continue to innovate for their customers across every industry," Huddleston said in the announcement.

The partner and developer evangelism role for Huddleston comes at a key time for Twilio, a 900-person company that is eager to show investors it is broadening its base of partners and customers. Twilio makes platform products that give developers APIs to allow them to embed communications technologies like voice, video, messaging and authentication into their own apps.

The company had a rough November, as investors punished the stock for the first full quarter of declining revenues from Uber. The ride-sharing app company decided last May to take more of the communications functionality of its apps either in-house or to use Twilio competitors in other geographies. Twilio's biggest customers are WhatsApp and Uber, which accounted for 6% and 5% of the company's revenues in the third quarter, respectively.

The danger of customer concentration is expected to be reflected in Twilio's fourth quarter results, which the company releases on Tuesday. Uber had accounted for 17 percent of Twilio revenues in Q4 2016, setting up a tough comparison.

At Microsoft, Gavriella Schuster replaced Huddleston as corporate vice president for One Commercial Partner in December, reporting to Judson Althoff, executive vice president for the Microsoft Worldwide Commercial Business.

Through conversations with Althoff, CEO Satya Nadella and former COO Kevin Turner both before and after he joined the Microsoft Dynamics team in the summer of 2016, Huddleston helped define a new structure for Microsoft's massive channel operation. Starting with the creation of OCP in January 2017, Huddleston integrated developer evangelism much more tightly into partner operations and began work on industry maps/solution maps/catalogs, which are regional lists of go-to partners for different solution areas. The OCP structure also included a major realignment of partner-facing job roles within Microsoft in the areas of build-with, sell-with and go-to-market.

Posted by Scott Bekker on February 12, 2018 at 6:11 AM0 comments


Microsoft Reports Growth in MCS

If you think of Microsoft partners as organizations that consult on and implement Microsoft technology solutions, one of the largest organizations in the channel is Microsoft's own Enterprise Services arm, which includes Microsoft Consulting Services (MCS).

Microsoft generally keeps communications vague about Enterprise Services and MCS, due to the sensitive nature of its occasionally testy relationship with enterprise and federal government partners. Still, the company releases some broad outlines of the group's performance in every financial report, and last week's release was no exception.

"Enterprise Services revenue grew 5 percent, and 3 percent in constant currency, as growth in Premier Support Services and Microsoft Consulting Services was partially offset by declines in custom support agreements for Windows Server 2003," said Microsoft CFO Amy Hood during the call with financial analysts.

Details in Microsoft's 10-Q filing (.DOC) with the U.S. Securities and Exchange Commission indicated that the 5 percent amounted to $64 million, suggesting overall Enterprise Services revenues for the quarter were in the neighborhood of $1.3 billion.

What that tells us about actual MCS revenue is a little, but not a lot. We can infer that MCS revenues may be increasing at better than 5 percent to offset the custom support contracts. Meanwhile, it's hard to know how big a chunk of Enterprise Services revenues comes from MCS. Premier Support Services is a big business, and even a declining custom support agreement business is accounting for part of the revenue.

Looking ahead to Q3, Hood told analysts to expect a similar revenue growth rate for all of Enterprise Services in Q3 compared to Q2, with growth in Premier Support offsetting the Windows 2003 custom support agreement decline, and no mention of MCS as a major factor either up or down.

Microsoft's services are generally focused at the highest end, with the company claiming 75 percent of its engagements are with the Fortune 1000, and Microsoft often acts as a prime contractor, pulling partners into deals in various roles.

What are you seeing out there? Is MCS being more or less aggressive in competing with you for customer deals than you've seen in the past? Let me know at sbekker@rcpmag.com.

Posted by Scott Bekker on February 08, 2018 at 9:22 AM0 comments


Connection to Award One-Time Employee Bonuses

Technology solution provider Connection is joining the list of companies offering employee bonuses in the wake of the U.S. Tax Cuts and Jobs Act.

Connection, which was known as PC Connection from 1982 until late 2016, announced this week that it will pay a $1,000 cash bonus to each employee.

"We are pleased to be able to provide this special reward to our valued employees for their hard work and commitment to excellence," Timothy McGrath, CEO and President of the Merrimack, N.H.-based company said in a statement.

While the company's statement didn't say how many employees the company has, its last annual report filing with the U.S. Securities and Exchange Commission a year ago put the count at 2,500 people. Connection's statement also said the company is still evaluating provisions of the legislation, which was signed in December, but that it anticipates a beneficial impact.

Among dozens of companies that have announced one-time bonuses or pay hikes in relation to the tax law are American Airlines, Apple, AT&T, Bank of America, Best Buy, Disney, Walmart and Wells Fargo.

Posted by Scott Bekker on February 08, 2018 at 1:34 PM0 comments


Partner Tidbits in Microsoft's Second Quarter Earnings

Behind Microsoft's latest earnings results, which pleased financial analysts even if they didn't do much for the stock price, were a number of directional hints and other key details for Microsoft partners.

CEO Satya Nadella summarized the big picture for the quarter, which included a 12% increase in revenues to $28.9 billion and a 10% bump in operating income to $8.7 billion, this way: "The intelligent cloud and intelligent edge paradigm is fast becoming a reality. Azure growth accelerated. LinkedIn growth accelerated. Microsoft 365 and Dynamics 365 are driving our growth and transforming the workplace."

The solid results come despite the turmoil in the sales organization related to the massive, layoff-heavy reorganization of the Microsoft field during the last year. The upheaval was severe enough to merit a mention during the call for financial analysts by Microsoft CFO Amy Hood, who partly credited partners for soldiering through the transition.

"Our sales teams and channel partners delivered another quarter of outstanding commercial results even as we continue to work through our sales reorganization from July," Hood told the analysts Wednesday night.

"The intelligent cloud and intelligent edge paradigm is fast becoming a reality. Azure growth accelerated. LinkedIn growth accelerated. Microsoft 365 and Dynamics 365 are driving our growth and transforming the workplace."

Satya Nadella, CEO, Microsoft

For any partner that hasn't heard the cloud message that Microsoft has been delivering since, oh, 2006, Microsoft continued to push that flywheel during the analyst call, as well. Specific to Nadella's overview comment about accelerating Azure growth, Azure revenues were up 98%.

Following up on Nadella's high-profile commitment to reach a $20 billion annual run rate for commercial cloud revenue, which Microsoft hit in its last quarterly earnings period, Microsoft is now blasting past that number. Hood said commercial cloud revenue for the second quarter hit $5.3 billion, which amounted to a 56% year-over-year improvement.

Commercial revenues for Office 365, one of the most important business areas for the Microsoft channel, also continue to surge. Those revenues went up 41% in the quarter, attributable both to installed-base growth and upselling to the E3 and E5 workloads that Microsoft heavily encourages its partners to peddle.

Hood said Office 365 commercial seats were up 30% and, in response to an analyst question, said that Microsoft believes there is still a lot of growth opportunity with Office 365.

Meanwhile, Dynamics partners can expect pipeline check-in calls from their Microsoft partner management teams surrounding Hood's forecast for the next quarter. "We expect double-digit Dynamics revenue growth from the shift to Dynamics 365," she said.

The technical terms that break the surface in the earnings call provide a window into which technologies have strategic emphasis in Redmond. Nadella's technology namechecks this quarter included Microsoft 365, Cosmos DB, LinkedIn Sales Navigator, Dynamics 365 for Sales and Talent, the Profile Card, Resume Assistant, Azure Databricks, SQL Server for Linux, Azure IoT Central, Surface LTE, Teams and Cortana.

Posted by Scott Bekker on February 01, 2018 at 9:31 AM0 comments


5 Hot Security Features on the Office 365 Roadmap

Microsoft is close to delivering a handful of key Office 365 security enhancements, including an attack simulation tool to test end users' behavior, updates to the Office 365 Secure Score and message encryption improvements, according to the official Office 365 Roadmap.

The Attack Simulator for Office 365 Threat Intelligence has the potential to be a very useful proactive defense tool for Microsoft partners and IT administrators. Unveiled at Microsoft Ignite in September and set for an imminent public preview, the simulator is a new feature of Office 365 Threat Intelligence.

That Threat Intelligence service, launched last April, provides real-time security insights on global attack trends culled from what Microsoft describes as billions of data points from its global datacenters, Office clients and other sources.

According to the roadmap, the attack simulator "enables admins to send simulated attacks (10-15 different attack categories including phish, brute force password cracking, etc.) to their end users to determine how they respond to attacks and determine if the right policies are in place to help mitigate real attacks."

[Click on image for larger view.] The Attack Simulator for Office 365 Threat Intelligence will allow administrators to test users' password strength and phishing attack readiness, among other things. (Source: Microsoft)

Also close are some additional features for the Office 365 Secure Score, which was originally came out a year ago to allow organizations to get a base security score from Microsoft based on dozens of factors in Office 365 covering user behaviors and security settings. It's like a credit score for an organization's cloud collaboration security posture.

Now Microsoft is adding an "Industry Average Score," displaying average scores that a company can compare to their own score. Microsoft is also testing an "Active Seat Average Score and Reporting Updates" feature for the Office 365 Secure Score. That will allow customers to compare their score against the average score for organizations with a similar number of Office 365 active seats. The update will also help organizations compare their own score between two different dates and offer the option to search a list of actions.

[Click on image for larger view.] Microsoft's original Office 365 Secure Score (pictured) became available a year ago. Microsoft is adding the ability for customers to compare their scores to like-size companies. (Source: Microsoft)

Microsoft is also fine-tuning the Office 365 Message Encryption capabilities it released in September. The feature was designed to make sharing of encrypted and rights-protected messages more seamless. However, the original release applied additional message restrictions, such as Do Not Forward. With the new version, administrators in the Admin Portal, or users in their Outlook client, can choose "encrypt only," without any other message restrictions.

In another change set to arrive shortly, Microsoft will add malicious link protection for end users sending e-mails within the same organization. Office 365 Advanced Threat Protection Safe Links for internal e-mails will include time-of-click protection and other functionality of Safe Links, Microsoft said. Slightly later in the quarter, Microsoft plans to introduce Office 365 Cloud App Security -- App Permission Alerts. The feature will allow administrators to create policies to be alerted when a user grants permission to an application to access Office 365 information.

All of the security features are currently in the "in development" section of Microsoft's Office 365 Roadmap page. Although many are supposed to be released very soon, the rollout for the Office 365 user base is staged and can take weeks or months.

Posted by Scott Bekker on January 31, 2018 at 12:21 PM0 comments


Microsoft Cloud Partner Community Reaches 68K

Six months after claiming to have more cloud partners than Amazon Web Services, Google and Salesforce combined, Microsoft says partners continue to join on to its cloud effort at a good clip.

Microsoft worldwide channel chief Gavriella Schuster shared some Microsoft Partner Network metrics during a State of the Channel briefing this month.

"Currently, we have more than 68,000 cloud partners, which is a 33% increase year over year," Schuster said during the briefing. That figure is up slightly from the 64,000+ figure that Microsoft cited in July at its Microsoft Inspire conference. It implies the count would have been about 50,000 partners a year ago.

Those partners are selling Microsoft's cloud services, such as Azure, Dynamics 365 and Office 365 through all of Microsoft's sales motions. All of that partner activity helped Microsoft reach a $20 billion annual run rate goal for cloud revenues in its first fiscal quarter of 2018.

Schuster also called attention to even faster growth within the Cloud Solution Provider (CSP) business model for partners. CSP involves almost all of Microsoft's cloud products, but allows partners to bundle Microsoft's products with a partner's own, as well as third-party, services to present a single bill to the customer. In that type of customer engagement, the partner, rather than Microsoft, owns pricing, billing and first-line support.

According to Schuster, the number of partners transacting through CSP in the past 12 months has grown by 83%.

Asked for clarification in an email, a Microsoft spokesperson said the total number of partners transacting in CSP is now 45,000. That's up from 37,500 partners transacting through CSP as of July. An 83% increase suggests Microsoft had just under 25,000 partners transacting through CSP a year ago. That rate of increase, fast at the start of the year, and slower in the last six months, would be consistent with figures shared by Microsoft for U.S. CSP participation this fall of about a 33% increase.

Posted by Scott Bekker on January 29, 2018 at 1:00 PM0 comments


Ex-Microsoft Dynamics Chief Tatarinov Joins Acumatica

Kirill Tatarinov, a longtime Microsoft senior executive and the former CEO of Citrix, is now a part of Acumatica's board of directors.

Bellevue, Wash.-based Acumatica provides cloud ERP solutions. As part of its board, Tatarinov will be advising his former Microsoft colleague, Jon Roskill, who joined Acumatica as CEO in 2014 after capping a long Microsoft career with a stint as Microsoft's channel chief.

"Kirill is a very big proponent of advanced technology," Roskill said in a statement, "and his views align well with our intelligent ERP efforts on machine learning, natural user interfaces, and Blockchain. Having another technology advocate on the Board will continue to inspire our product development."

Tatarinov and Citrix parted ways in July after he held the job for about 18 months. Previously, he worked at Microsoft for 13 years, including a lengthy period running Microsoft Business Solutions/Dynamics, which includes the company's ERP and CRM products.

On the Acumatica board, the Moscow-born Tatarinov joins investor and technologist Serguei Beloussov, the executive chairman and co-founder of Acumatica. Beloussov, a native of St. Petersburg, Russia, is also the co-founder, CEO and chairman of the board of Acronis and executive chairman of the board and chief architect of Parallels.

Posted by Scott Bekker on January 25, 2018 at 4:44 PM0 comments


Partners Jumping Aboard Microsoft Co-Sell Program

The co-selling program that Microsoft publicly unveiled last July is booming, according to Microsoft's worldwide channel chief.

Gavriella Schuster provided details of the program on Wednesday during a State of the Channel briefing with reporters and industry analysts.

Microsoft first discussed the co-selling program at its Inspire 2017 conference. At the time, Microsoft had been doing a pilot version of the program, in which Microsoft and partners jointly took the partner's solution to market as a packaged offering.

"That is about not selling Microsoft solutions but actually selling partner services," Schuster said Wednesday. "[We're] taking the end solution that a partner has built on the Microsoft technology that really meets the customer demand more specifically and bringing that partner in to sell with us to those business decision makers."

The pilot program during Microsoft's 2017 fiscal year, which ended last June 30, involved 500 co-sell partners. By June 2017 there were 1,400 partners, and in December 2017 the full-fledged program reached 9,000 participating partners.

"That is about not selling Microsoft solutions but actually selling partner services."

Gavriella Schuster, Corporate Vice President, One Commercial Partner, Microsoft

Helping drive participation both with partners and internally at Microsoft is a $250 million Microsoft investment in seller incentives. Some of that funding gives Microsoft sales reps payment on up to 10 percent of the annual contract value of the joint solution.

Schuster said the project sizes are on average nearly six times larger when a partner is involved, and she said opportunities are closing faster than with regular deals, as well.

Some partners co-selling with Microsoft through the program are OSIsoft, which has 12 joint wins with Microsoft, and DataStax, which is reporting a 140 percent increase in pipeline through the co-sell opportunities.

Schuster said the co-selling program is a way for Microsoft and partners to align better with the shift in IT decision-making from centralized IT departments to line-of-business leaders.

"In order for us to get them the kind of information and insight [that they need], the right solutions, we said we have to think about the way we sell our technology differently. So instead of the traditional supply chain approach that we've had with our partners where Microsoft produces a product, our partners then sell it, and then our partners will deliver the services and post-sales support to our customers for deployment, we said we have to reimagine that, and the reimagination is something we call co-sell," Schuster said.

There are rigorous criteria for getting involved in the co-selling program, involving proven competency and capability, as well as having the right types of employees in the appropriate geographies. Once those are established, Microsoft will work on building a joint business plan with the partner. "Then what we would do is package up their services and ours together into our catalog," Schuster said.

Posted by Scott Bekker on January 24, 2018 at 2:44 PM0 comments


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