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Five hot spots to watch at this week’s Microsoft Worldwide Partner Conference

[Note: This week is proud to introduce its newest expert blogger — Barbara Darrow — one of the most expert, most experienced reporters covering Microsoft and its VAR community. Watch here for her coverage and analysis from Microsoft’s Worldwide Partner Conference in
Denver this week.]

The thousands of Microsoft partners—ISVs, VARs, solution providers, integrators—converging on Denver this week have a lot on their minds.

Here, from a completely non-scientific survey of several Microsoft partners – both the “classic” and Microsoft Business Solutions varieties — are the five hot spots to watch at the annual Microsoft Worldwide Partner Conference.

1: Profitability

The “P Word” is always top of mind for partners. Margins continue to be a huge challenge—although one that is not specific to selling/supporting Microsoft wares.

Can a solution provider or ISV make fat margins selling Microsoft licenses alone? In a word: no. Can he or she profit by customizing, supporting and guiding customers through transitions from non-Microsoft (or even old Microsoft) wares to new goods? More likely.

MBS partners in particular see the company’s traditional high-volume, low-margin approach as sweating their traditional margins; and they are none too happy about it. Several say they can make better dough selling SAP Business One or other competitive products that are not so widely distributed.

Microsoft continually has to address charges that it is carpet-bombing the market: designating too many partners for any given geography, sparking partner-on-partner bloodbaths.

To be fair, no partner exec ever says the existing margin is good enough. Find me one who says he’s satisfied with his profit on software sales and I’ll sell him a bridge in the desert.

2: What’s with MBS?

MBS has struggled for profitability (there’s that “P word” again) and now that it’s been sucked into the overall Microsoft Business Division under Jeff Raikes, it will be hard to determine when and if it will do so.

Many long-time Great Plains/Solomon-type VARs keep an anxious eye on the MBS org chart – especially given the diaspora of the old-time Fargonauts from Microsoft (or from MBS to other parts of Microsoft). (Note: Fargonauts are the long-time Great Plains Software folks from Fargo, N.D., who came to Microsoft via its great Plains buyout and formed the heart-and-soul of the MBS business apps push. Long-timers Doug Burgum, Jeff Young are in the process of leaving, and Doug’s farewell tour has taken on epic overtones).

Tami Reller — another Fargonaut who many expected to get the top MBS job – was passed over in favor of Kirill Tatarinov. Lynn Stockstad, another long-timer, is now in the Enterprise Partner Group. Folks like Don Nelson made the transition to
Redmond long ago. The list goes on and on.

3: Tarnished Gold

Even many Gold-certified Microsoft partners say the Gold status isn’t worth the paper it’s printed on.

Many lament that when they partner up with another Gold partner out of necessity — Microsoft encourages partners with one specialty to work cooperatively with partners in other specialties — the quality of the other Gold’s work isn’t up to snuff.

What to do? Source say Microsoft’s next, next-generation partner program — currently going under the code-name “Octane” — will make it more difficult to attain the Gold status and may be quite unsettling in how it does that.

“Draconian” is the word one partner used. Suffice it to say, qualification standards will be upped, the bar will be raised. Stay tuned for much gnashing of teeth.

4: Forsaking the cool factor

Microsoft’s “integrated stack” message cuts both ways.

Some say selling customers a soup-to-nuts, one-vendor play is easier for them and attractive to customers. But those who say that tend to be partners who are already firmly in the Microsoft camp.

An increasing number of solution providers see gold in the wave of Linux-Apache-MySQL-PHP (LAMP) solutions hitting the market, and think they can reap more service and support dollars integrating those. They argue that the money customers save on software itself flows into services and support.

Face it, the Windows-Office-everywhere sales pitch is old school now. The cool kids see Google and the various SaaS players as the sizzle. And the details around Ray Ozzie’s software plus services play remain, shall we say, cloudy? (Pun intended.)

The fact that Microsoft keeps rattling its patent/intellectual property infringement suit saber isn’t endearing it to larger enterprises virtually none of which run entirely on Microsoft goods.

Where Microsoft competitors Oracle and IBM have ridden Linux successfully as a proxy horse in their races against Microsoft, many see Microsoft itself as an obstructionist. In fact, many now agree with an assertion I made many years ago in another venue, that Microsoft has become the new IBM.

5: Who’s the customer?

What does Microsoft want to be when it grows up? A games company taking on Sony, Nintendo? A consumer electronics/music vessel company vs. Sony and Apple? An enterprise applications company taking on SAP, Oracle et al?

It doesn’t help that Microsoft, like most other vendors is segmenting its partners by customer base, with Enterprise Partners Group (EPG) working mostly with the huge global an some regional integrators an Small and Mid-market Solutions & Partners(SMS&P) trying to corral the VARs who target small and mid-sized company. Such divisions are never so neat.

Many smaller VARs have customer in the Fortune 500 and they resent what they see as pressure from Microsoft to ease them out of those accounts. (Microsoft HQ denies this, but fellahs, what happens in the field often stays in the field.) There is also contention between the EPG and SMS&P groups within Microsoft itself.

Even stalwart Microsoft partners think it’s time for the company to pick its battles and focus on the markets it really, really wants. Of course, Microsoft has never been one to shy away from challenges, but seriously folks, must it really dominate every business it enters to the exclusion of all others? Silly question.

Will its focus on new markets cost it in the bread-and-butter client operating system, desktop productivity apps, and server OS markets where it has succeeded so wildly?

In the always-safe cop out summation, let’s just say: Time will tell.

Contact’s newest expert blogger, Barbara Darrow at

Let us know what you think about this story; e-mail Kevin Fogarty, News Director

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