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July 17, 2006

Partnering with Microsoft in the “Live” era

Posted by David Hunter at 11:52 AM ET.

There was so much product news at last week’s Microsoft Worldwide Partner Conference in Boston that I gave rather short shrift to some of the more conventional partner promotional activities. Paul F. Roberts and China Martens at InfoWorld:

But with the release of Office 2007 delayed and company founder Bill Gates saying Vista, the next version of Windows, is only “80 percent” guaranteed for its January 2007 release, Microsoft needed to bring more than just good vibes to Beantown. As it turned out, Ballmer brought both carrot and stick: new pricing programs and incentives for partners in one hand and vague threats for those who sell non-Microsoft products in the other.

For example, SSA (Security Software Advisor) is a new program that provides considerable cash incentives to partners that deploy Microsoft security products such as the Forefront family of client and server security products, ISA Server, and Antigen messaging security products. To promote its security wares, Microsoft is promising to “skill up” existing partners on security and is permitting certifications from organizations such as ISC2 and ISACA to satisfy its Security Partner Competency, said Steve Brown, director of product management for security, access, and solutions at Microsoft.

Microsoft is also dangling cash, offering partners bonuses of as much as 20 percent of the total sales of its security products, and 30 percent in the next seven months, Brown said.

But Microsoft is also taking a tougher line with its partners and resellers, as Ballmer made clear in his keynote. Partners, he said, have a choice to work with Microsoft or its competitors.

“Some of these choices will probably be less comfortable than some of the other choices that we present you with from time to time,” Ballmer said.

No real details on the “stick,” but there were more carrots including a branch office infrastructure promotion, an updated SQL Server competitive migration program, revised terms for reselling Microsoft systems management software, plus a little boosterism of Windows Vista for the ISVs in the crowd.

While all this is typical partner program activity, Mary Jo Foley at Microsoft Watch picked up on some interesting comments from Steve Ballmer:

Microsoft partners won’t see much, if any, new revenues from Microsoft’s growing Live family of services in the next year. But throughout the coming decade, the Live tide will transform the kinds of products and services that Microsoft and its partners will be selling, according to Microsoft CEO Steve Ballmer.

A brave vision, for sure, but what’s really in it for the partners?

On the Live side of the house, Ballmer said Microsoft would continue to build out new services on the search, content, collaboration, communications and business services fronts.

“That transition will require that we bring you – our partner community – with us,” Ballmer said. “There will be services we host and services you host. Some services sold by you on commission basis. There will be value add around hosted services.”

Among the new Live opportunities Microsoft forsees for partners are AdCenter referrals, Live subscription referrals, hosted managed services and applications, reselling Live subscriptions and hosted solutions and customization of on-premise, hosted and Live solutions, Ballmer told attendees.

Let’s run ‘em down:

- AdCenter referrals: If this is just a reference to a standard referral program, there’s not much there. However, there are businesses today that help Google AdWords customers optimize their buys and there isn’t any reason why there wouldn’t be the same opportunity for AdCenter. That’s more an ad agency or media buyer function than the usual partner fare.

- Live Subscription referrals and reselling Live subscriptions: This sounds pretty nebulous for the consumer space since Windows Live is mostly free and Xbox Live is more retail fodder than a partner business. I guess there’s some spare change in Office Live referrals, but it’s hard to see much of a continuing revenue stream. There’s likely more cash in a referral for the Microsoft hosted Live Dynamics CRM that Ballmer announced, but it’s hard to see how it could compare with the revenue from a VAR installation of regular Dynamics CRM.

- Hosted managed services and applications: Since that same Microsoft hosted Live Dynamics CRM announcement blew partners who were already hosting Dynamics out of the water, this hardly seems enticing.

- Hosted solutions and customization of on-premise, hosted and Live solutions: Now we’re talking real partner business. Partners who build and/or install custom solutions can now use Live services as infrastructure instead of today’s installation on a customer owned server. So far, Live Dynamics CRM is the only one to work with though.

To net it out, if Ballmer wasn’t just blowing smoke, there must be a slew of Microsoft hosted middleware on the way and partners will have to expand their value add beyond mere provisioning of Microsoft based infrastructure. Fair enough, but where does this fit in today’s troika of Windows, Office, and Xbox Live? The question wasn’t answered for Microsoft Live Dynamics CRM which seems to sit out on its own. but maybe there’s a Microsoft Business Solutions Live coming?

Filed under Advertising, Antigen, CRM, Commoditization, Dynamics, Dynamics Live, Forefront, General Business, ISA Server, MBS, MSN, Microsoft, Office Live, Online Services, Partner Program, Servers, adCenter

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