Partners: The New Distribution Vehicle

Microsoft's partner program, now 380,000 companies strong, might have more to do with the company's success than even Microsoft initially imagined.

For all the pain that Microsoft's efforts to overwhelm Netscape eventually caused the company, those efforts also led to the company discovering one of its greatest strengths.

As the Findings of Fact from the antitrust trial recount, Microsoft realized that simple parity with Netscape was not enough. Jim Allchin, leader of the Windows team, told another executive in December 1996 that he did not understand how Microsoft's browser would win, even if Internet Explorer was as good as Netscape. The one that would win, Allchin said, was the one that already had 80 percent of the market -- Netscape.

Allchin argued that Microsoft had to tie IE into Windows, Microsoft's huge asset. Further research led to Microsoft's famous stunning insight: Microsoft could make users switch away from Netscape by getting them to upgrade to Windows 98. As people upgraded, they would already have IE bundled on their computer and would have no need for another browser, such as Netscape.

Microsoft's greatest strength is this: By putting a new application on the Windows distribution disks that are shipped to OEMs around the world, Microsoft can put more copies of a new application on more computers faster and cheaper than anyone. Without advertising, downloads or payment, Microsoft can get a new application on about 220 million PCs a year.

What does that have to do with partners? Plenty. I think partners are Microsoft's new distribution vehicle.

The company now has 380,000 official partners. To put that in perspective, the next largest vendor partner program, according to a 2005 IDC study, belongs to Intuit, with 25,000 members. Now, I'll agree that many of Microsoft's partners aren't big, serious players, but if we dismiss the 350,000 registered partners (and they shouldn't all be dismissed), we're still left with 30,000 Certified and Gold Certified partners. Furthermore, IDC rated Microsoft's program the best among software vendors.

My reading of Microsoft's strategy at this point is that in the last year (maybe about the time Kevin Turner came on board as chief operating officer) a light went on up in Redmond: "Just think what we could do if we could get 380,000 companies all around the world heading in the same direction at the same time." That's an overwhelming presence in the IT marketplace.

As exciting as this is for Microsoft, many partners may not be comfortable in this role. Many, for example, see themselves as advocates for their customers -- not for Microsoft. Others are focused on building their own businesses, and Microsoft is just the platform into which they most often plug their own products or technologies.

While Microsoft is focused on Windows Vista and Office 2007, with occasional sideways looks at Google, those arguably aren't big priorities for many partners. For every partner I've heard sing the praises of Vista, I've heard another groaning about the pain of an OS upgrade, particularly if they're going to have to adapt their existing code to User Account Control, SQL Express (instead of MSDE, which won't be supported by Vista), the Aero interface and other significant changes. Many partners won't realize much net benefit from the work they do to adapt.

Nevertheless, partners need to take two realities into account. Yes, you can expect to see Microsoft pushing its priorities more openly and directly onto partners, whether they like it or not. And yes, you can also expect Microsoft to continue to offer one of the best partner programs in the business, one that will be replete with a lot of valuable aids that partners can tap into.

But I'd recommend that partners stay sharp in defining what their own long-term interests are, and making sure that their participation in Microsoft's partner program and sales campaigns is a genuinely strategic activity for them. The future can be a win for both Microsoft and its partners -- just make sure you know what winning looks like for you.

About the Author

Paul DeGroot is principle consultant with Pica Communications, which provides consulting services for customers with complex Microsoft licensing issues.