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Microsoft courts midmarket ISVs with sales help, hand-holding

Microsoft is offering technical development help, assistance putting together a business plan, advice on how to expand overseas, even low-cost telemarketing and sales to small ISVs who promise to develop in Windows Vista, with Office 2007 and other products.

Microsoft is making an eleventh-hour push to make sure smaller software developers catch on to the Windows Vista bandwagon as soon as it rolls out the gate.

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It's not ignoring the 1,500 or so independent software vendors (ISVs) whose sales range between $5 million and $500 million per year -- and whose products account for 80% of its revenue.

But it is expanding the range of support services it offers to 65,000 or so ISVs whose software-sales revenue ranges between $0 and $5 million.

The company will add additional technical and development support to help small and midsized ISVs get products shipped that support Windows Vista, Microsoft Office 2007, SQL Server and Exchange, according to Naseem Tuffaha, senior director, ISV sales and marketing at Microsoft.

In addition to the technical help, Microsoft will help ISV partners in many countries develop business plans for both their own domestic markets and for expansions into other national markets that will help them survive selling software that runs on Microsoft products.

And it will provide demonstration spaces and marketing events at which they can evangelize their products and provide direct-sales assistance, including low-cost telemarketing services that partners can use to sell the products directly.

"Small companies today represent large companies tomorrow," Tuffaha said. "We're trying to round out the solutions customers are looking for, and also to be sure we can offer niche-type solutions."

The programs are only open to companies that make more than 30% of their revenue on software sales alone, specifically to exclude systems integrators and other "implementation partners" for which Microsoft is developing separate programs, Tuffaha said.

The drive for small software vendors and – separately – for channel companies, is an effort to reach the midsized organizations that make up the bulk of companies both in the U.S. and abroad, according to Paul DeGroot, analyst for Directions On Microsfot in Kirkland, Wash.

Many larger companies are already saturated with Microsoft products, making the less-well-served midmarket particularly attractive as a way to find incremental revenue.

"But Microsoft's not the only one doing that," DeGroot said. "SAP is doing it, Oracle, IBM – a lot of companies. It's Microsoft's market to lose, though. Microsoft doesn't need any introduction in the midmarket. But if you're Oracle, you're going to say 'I'm Oracle.' And they're going to say: 'Who's Oracle? It'll take some introduction."

As part of the services blitz, Microsoft representatives will do their best to convince ISVs that building software for more than one operating system, database, productivity suite or email system wastes the resources of small companies.

A lot also struggle with the idea of developing software exclusively for a fat-client operating system rather than the simpler task of building a Web service that customers could put on their own servers to control both administration and security, DeGroot said.

ISVs may also have trouble envisioning Office 2007 as a key development platform.

"The problem with using Office as a development platform is that there are several different technologies you can use to develop on it," DeGroot said. "Plus, it's a heavy duty client; it's an expensive client, and many corporate IT departments have moved to Web-based applications. There's a certain lack of enthusiasm for building everything on top of Office."

Nevertheless, Tuffaha expects that 12 months after it ships, half of software sold on Windows will be running on Windows Vista.

DeGroot doesn't doubt it, but doesn't think Vista will be as much a slam dunk as Microsoft execs might hope.

"People do develop on Windows and Office, and they will do it, but this is fairly typical prelaunch stuff for Microsoft, for the last three versions of Windows," he said. "But they're fighting the tide a little bit. Web-based applications are so much easier to manage and are so much less expensive, and you don't have to worry about which tool to develop with.

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