10 Things We Learned At The Microsoft Worldwide Partner Conference12:00 PM EST Tue. Jul. 24, 2012
More than 16,000 Microsoft partners came to this year's Worldwide Partner Conference in Toronto with a lot of questions. Just when would Windows 8 be ready to ship? Was Microsoft serious about not selling its Surface tablets through the channel? And what kinds of changes to the Microsoft Partner Network would the company unveil?
With so much crammed into four days, it was a lot for attendees to take in and it would be easy to miss some of the big-picture stuff coming out of the conference. Here's what we thought were the 10 key takeaways from WPC 2012.
When Microsoft unveiled the Surface tablets and referred only to sales through Microsoft retail stores and Microsoft.com, some partners assumed the lack of any mention of channel plans was just an oversight. Wrong.
Microsoft CEO Steve Ballmer (left), in an interview with CRN, said channel partners who want to resell Surface could buy it from Microsoft.com. "They can’t order from their normal distribution," Ballmer said. "They can order it off Microsoft.com. And they can do what they want off Microsoft.com. But we are not setting up what I would call a typical distribution chain. What our partners choose to do is up to our partners."
When Microsoft debuted the Surface tablets, no one was more surprised than the company's hardware OEM partners that build laptops, tablets and other devices with Windows. Just what does Surface mean for future Microsoft-OEM relationships?
CEO Steve Ballmer, in the interview with CRN, promised that OEMs would have a level competitive playing field when it comes to Windows 8 tablets. Microsoft will license to OEMs everything in Windows that Microsoft itself uses in Surface, for example, and Microsoft will charge an internal royalty for Windows on Surface to keep things on an equal footing from a price perspective. And Ballmer promised that confidential information provided to Microsoft by OEMs would be kept from the Surface team. But in the interview Ballmer also indicated that Surface could spur OEMs to develop more innovative tablet products. "I don't think it is going to hurt in terms of stretching innovation," Ballmer said.
We knew they were coming this year. But just when the new releases of Microsoft's flagship products would be available had been a guessing game until WPC when Microsoft executives spelled out the timetable.
Windows 8 will be released to manufacturing the first week of August ("RTM" in Microsoft-speak) and Tami Reller, corporate vice president of the Windows and Windows Live Division, said that means customers and channel partners can expect to get their hands on it by the end of October.
Microsoft also said that Windows Server 2012 would "go RTM" in August and be generally available in September.
The spotlight may be on the upcoming Windows 8. But right now the "show me the money" action is upgrading customers to Windows 7.
More than fifty percent of all enterprise desktop PCs are now running Windows 7, said Tami Reller (left), corporate vice president and CFO of Windows and Windows Live, in a keynote. "The rate of overall Windows 7 adoption is increasing," she said, noting that more than 500,000 PCs per day are being upgraded to Windows 7 from Windows XP and Windows Vista. Altogether Microsoft partners have sold more than 630 million Windows 7 licenses, according to Reller.
But that leaves a big chunk of customers still running Windows XP for solution providers to upgrade.
Microsoft is boosting its incentives to encourage channel partners to focus on developing solutions around multiple Microsoft products, not just reselling specific products, and on developing cloud-related businesses.
At WPC Microsoft said it would spend an additional $200 million on cloud and solution incentives for channel partners in fiscal 2013 (starting July 1), boosting spending for those specific efforts by 40 percent. It increases the company's overall partner incentives spending to more than $4.2 billion, said Jon Roskill (left), corporate vice president of the worldwide partner group.
Microsoft also touted an IDC white paper that said Microsoft's spending through its partner program, the Microsoft Partner Network, provides $320,000 in value annually to a Microsoft partner with about 50 employees, $5 million to $10 million in annual sales, and between two and five Microsoft competencies.
Partners who earn incentives under the Microsoft Managed Reseller Incentive Program will now be required to have at least a silver competency to participate, said Roskill (left) in an interview with CRN. The deadline is Dec. 1.
The Managed Reseller Incentive Program is aimed at bigger VARs that typically resell more than $75,000 of products a year. Roskill said he expects to see a spike of several thousand partners seeking certification for silver competencies as the deadline approaches.
Microsoft has also been steadily raising the bar for solution providers who work with the company's ERP and CRM applications. At WPC Microsoft said it is expanding its pay-for-performance incentive policy to cover its Dynamics CRM and Dynamics CRM Online products. Under pay-for-performance, which the company began last year for its ERP applications, incentives are designed to encourage partners to win new customers and expand sales to existing customers, not just maintain a customer base.
"The ones that drive growth will be more highly rewarded than those that don't," said Doug Kennedy (left), vice president of Microsoft Dynamics partners. Microsoft also increased the number of ERP competency technical certifications Dynamics AX resellers need to qualify for Microsoft Partner Network Gold status. Dynamics AX is Microsoft's top-of-the-line ERP application suite and Kennedy said Microsoft wants only "enterprise-class AX partners to sell in the enterprise space."
Every year at the Worldwide Partner Conference Microsoft executives seem to zero in on specific competitors as the enemy. This year VMware was the target.
While introducing Windows Server 2012 in a keynote, Satya Nadella (left), president of Microsoft's Server and Tools Business, spent a great deal of time touting the server's expanded virtualization capabilities and comparing them to VMware. He also urged solution providers to take an aggressive stance to win over VMware customers and unveiled the "Switch to Hyper-V" program that offers tools, training and guidance to help partners convince customers to shift from VMware to the Hyper-V technology in Windows Server. Microsoft COO Kevin Turner also took aim at VMware in his keynote, calling VMware "expensive" and saying Microsoft is now gaining market share against the virtualization technology rival. And he had a message for partners who haven't switched from VMware to Microsoft's product: "You're late, but we still love 'ya."
Since Office 365 went live in June 2011, Microsoft has billed customers directly for subscriptions to the cloud applications and paid channel partners fees under what the vendor called an "Advisor" program. But some partners weren't happy with that arrangement, saying it interfered with their relationship with their customers and resulted in customers getting separate bills from Microsoft for subscriptions and partners for other services.
Under the Office 365 Open program unveiled at WPC partners will be able to buy Office 365 subscription keys from a price list, sell subscriptions to customers and bill them for the service. That's the approach Microsoft offers channel partners for most of its software products. "They can package up their own services with the subscriptions on their invoices," said Kirk Gregersen, general manager of Microsoft Office marketing, in a pre-WPC interview. "And they can recognize more top-line revenue. We know that for our 'Open' partners, this is their lifeblood. This will have a huge impact."
Ballmer acknowledged that Microsoft would use its Windows 8 virtual desktop infrastructure licenses as a competitive weapon. "We are in a battle," Ballmer told CRN in an interview at Microsoft's Worldwide Partner Conference. "Our partners will figure that out, and they will find the best value for the customer."
In Windows 8 Microsoft is introducing the Companion Device License (CDL), which gives volume licensing customers the right to access corporate desktops through virtual desktop infrastructure on up to four personally owned devices. The CDL only applies to non-Windows tablets. Organizations whose employees use personal Windows 8 tablets with VDI won't have to pay extra for the rights conveyed by the CDL. That could provide Microsoft's Surface tablets a competitive advantage.