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Partners Forecast Trickle-Down Benefits from Microsoft's AI Focus

An IDC study sponsored by Microsoft highlights how embracing the company's AI efforts can boost the channel's bottom line.

"Partners are realizing economic value in their relationship with Microsoft and its technology, including AI," the research firm summarized in the report, which surveyed nearly 640 Microsoft partners around the world.

From this pool of respondents, IDC found that partners that have hitched their wagons to Microsoft's AI initiatives are very optimistic about the financial rewards. Specifically, 81 percent said they expect AI to increase their Microsoft-based revenues, and 71 percent said the same for their Microsoft-based profits.

Partners that are more entrenched in Microsoft's AI technologies are more optimistic. Those who derive at least a quarter of their Microsoft-based sales from AI expect higher revenue growth and gross margins than those with a smaller AI focus.

Overall, partners projected their Microsoft AI-related sales this year to grow by nearly 40 percent.

There's immense opportunity in AI for partners, IDC indicated, which is no surprise given current demand. Total AI spending is already well into the 12-digit range and accelerating rapidly, growing four times faster than overall IT spending, and is expected to reach $512 billion by 2027. Generative AI is growing even faster.

Microsoft's success with its Copilot product stack is no doubt contributing to this demand. IDC suggests partners should strike while the AI iron is hot, and make efforts to incorporate AI into their software and services offerings.

"AI has the potential to drive broader partner services into customers as it creates new and deeper opportunities based on business transformation," the report said. "AI is opening all aspects of partner services in a bid to drive customer use cases and value."

It added, "Software development partners are integrating Microsoft's AI capability into their own software and creating new AI applications to meet customer demand for AI."

Other notable findings from IDC's survey include:

  • For every $1 of Microsoft revenue, Microsoft MSPs made $8.45 and Microsoft ISVs $10.93.
  • Partner revenues from Microsoft-related sales grew by 31 percent in 2023, with similar growth expected in 2024.
  • On average, partners achieved gross margins of 30.7 percent from Microsoft-related sales.

About the Author

Gladys Rama (@GladysRama3) is the editorial director of Converge360.

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