Solution providers see Microsoft marketing funds dry up

Solution providers say Microsoft has cut marketing funds and other partner resources, and it may get worse.

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The flow of marketing funds and other resources to Microsoft's partner army has slowed significantly over the past several months, solution providers say. And word on the street is the partner-allocated budgets for next year will get even slimmer.

The change over the past year has been striking, according to half a dozen Microsoft partners in four U.S. regions. Most of the partners requested anonymity.

Some solution providers attributed the downshift to the overall economic slump, but most said they have detected a notable shift in Microsoft's attitude toward partnering in general. The change has been felt both by the corps of Microsoft Business Solutions (MBS) partners authorized to sell the company's higher-margin enterprise resource planning (ERP) software and the much larger number of "classic" partners who sell and implement the volume products including Office, SQL Server and Exchange Server.

"I would say that funding for joint marketing and other work is down more than 50% over last year," said an executive with one Microsoft Gold classic partner organization.

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Microsoft said it has not sliced channel budgets at all. It has, however, worked "hard to preserve investments and prioritize programs that help partners directly address customer needs for efficiencies and cost savings," said Cindy Bates, vice president of the U.S. partner group via a spokeswoman. Microsoft is committed to supporting its partners with resources that serve customers effectively, she said.

One large MBS partner said that Kirill Tatarinov, Microsoft's corporate vice president in charge of MBS, thinks that the company can allocate marketing funds better than the partners themselves. "He is cutting back to only do programs that are totally endorsed by Microsoft and can add significantly to client [additions]. The amount of dollars allocated to marketing is about 30% of what it's been in the past," said the partner.

Partners see priorities -- and funds -- shift to consumer business

Some partners agree that the company feels the need to exercise more control on targeted accounts. And still others think the company has been thrown off kilter by Google's success and developed an obsession with that cloud-based threat. They see a drift away from partner-engaged business software to consumer-oriented software that is more amenable to the Software as a Service (SaaS) model which may--or may not--include partner involvement.

"My sense is that Microsoft is just less partner-focused than it used to be," said Dave Sobel, CEO of Evolve Technologies, a Fairfax, Va.-based solution provider specializing in infrastructure work for small businesses. "It's not a conspiracy, it's just that they have set their sights on Google and Apple and they're forgetting what got them there."

Michael Cocanower, president of Phoenix-based itSynergy, said he hasn't seen much pullback from Microsoft overall, but he acknowledged a decrease in direct marketing dollars dedicated to specific products.

"For example, SBS and EBS have 'virtual' launches this week rather than live events. My sense is that there is less money being spent on marketing those new products," Cocanower said, referring to Microsoft Small Business Server and Essential Business Server.

Indeed, many solution providers who sell, customize and support Microsoft software for small businesses and larger enterprises have said that Microsoft's Google fixation has caused it to neglect core products and their partner-focused delivery while it builds its cloud-based platform. Some trace the Vista fiasco to that overarching quest to beat Google.

One MBS partner said he thinks Microsoft is loathe to spend big dough on MBS, which had been seen as a relatively tiny but strategic part of its business applications push. Microsoft has bigger fish to fry -- especially with the availability of viable and less pricey options to Microsoft's cash-cow Windows and Office franchises, he said.

"They are getting attacked on their main businesses -- all of the infrastructure and desktop software -- so all of our funds are being pushed to hold off competition there. Why spend a dollar on a $1 billion business when it's unclear what you get in return? Maybe $1.05. If you spend a dollar on infrastructure you could save or bring in a million dollars -- that's the magnitude of difference in the investment versus the return," he continued.

Of course, with a partner population as large as Microsoft's, when one segment is de-emphasized, another often reaps new rewards. Partners in the unified communications arena, for example, are feeling a lot of love in the form of marketing funds from Redmond.

Gold Systems, a voice integration expert based in Boulder, Colo., is getting as much support from Microsoft as ever, according to CEO Terry Gold. Gold Systems is an early adoption partner of Microsoft's Tellme Networks hosted voice portal service. Because Tellme, acquired two years ago, works in a SaaS model, it's become something of a priority as Microsoft moves toward offering hosted options of most of its software stable.

"I don't see a decrease in funds, but [Microsoft has] changed how the programs work. You have to do different things to qualify now. In our world, they've tried to spread the money around to more customers, but I would not say there's been a decrease," Gold said.

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