Channel Surfing for Partners

Filter out Vista noise -- it's really about business customers.

Windows Vista is available online. Microsoft is hosting Dynamics CRM and the Forefront line of e-mail security products. Salespeople at Best Buy are certified and the company is opening special centers for small businesses. Ray Ozzie keeps talking about Software as a Service. Windows Live and Office Live are born.

It sure adds up to a confusing picture, particularly for Microsoft's channel partners. Microsoft is spilling out of its traditional channels and picking favorites, something it has rarely done in the past. For Microsoft, it's either a "New Day" (per the theme for the Vista and Office 2007 launch) or a New Wave (how the company's been describing this breaker for a long time). But from the partner perspective, it may be something you don't want to be in front of, like a tsunami.

While some partners will likely be hurt by some of these changes, the overall picture remains a bright one, in my view. Many partners have survived numerous technical, business and channel challenges; today, their businesses look dramatically different, but no less profitable, than they did a decade ago.

People and companies adapt most successfully by remaining anchored to things that don't change and riding out temporary blips or waves-while snatching new opportunities that float past.

In the dot-com boom, we were tempted to believe that the "new economy" changed the rules about profitability-and the dot-com bust showed us that, nope, those rules hadn't changed after all. Ultimately, earnings still count for more than sock puppets. On the other hand, we heard in the dot-com boom that the Internet was the new downtown; and in the dot-com bust, that one still turned out to be true. A lot of old-line companies have moved there to join the dot-coms that survived the bust.

During the dot-com boom, technology ruled. In the dot-com bust, it turned out that, no matter how cool your technology, business basics like operations, customer service, fruitful alliances and strategic clarity still matter. Nevertheless, technology has altered customer communications forever.

So what's new-and what's old-about Microsoft in these changing times?

What's old is that Microsoft still makes about 85 percent of its money from business customers. A big chunk of the other 15 percent comes from sales of the Windows OS to consumers who buy a new PC-and never send Microsoft another dollar.

The lesson: It may not be worth losing a lot of sleep over Microsoft's pursuit of consumer-oriented channels such as retail or direct online sales of software. Those may turn out to be simply efficient fulfillment mechanisms and business customers will still be willing to pay as much for good advice, wise counsel and hand-holding as they ever did.

What's new is that Microsoft is breaking out of its traditional channels. There's nothing new about an opportunistic and coldly analytical Microsoft. This is a company with little institutional memory. If Microsoft did something for a long time in the past, that's because it worked for a long time. And if Microsoft stops doing something, that's because Microsoft doesn't think it's working, or it thinks something else might work better.

The lesson: Be opportunistic and analytical, including about your relationship with Microsoft. If it works, keep doing it. If it doesn't work, change or end it. And don't be afraid to copy what works for other people-you learned that from Microsoft as well.

Software as a Service may be new, but neither software nor service are. The final lesson: Microsoft is really good at software. Partners are really good at service. It's gonna take both for this to really work.

About the Author

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


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