Microsoft's '06 Challenges

The pundits at Directions on Microsoft released their annual top ten challenges for the Big M last week. (To read them in full, see the Directions site.)

Some highlights:

#1: Persuade the world, in particular the business world, that the upcoming Vista client is worth the trouble of an upgrade. In short, the gee-whiz graphics –which will require the latest in graphics hardware, btw—could be more a downer than an attraction for business IT buyers, says Directions' analyst Rob Helm

# 2: Take a firm, hard lead on app security and reliability. Enforce well-behaved windows apps once and for all, says Directions Michael Cherry.

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#3: My personal favorite: Get clear on Managed Services.

If the company does more along the lines of its Energizer work –where Microsoft IT runs the IT department for a customer's company has completely muddied the water for many VARs and integrators who view themselves as the natural army to fulfill such needs.

The "managed solutions" business could be profitable in its own right, but could also boost the Windows and Office franchises, which together generate 50 percent of Microsoft's revenues and the bulk of its profits," writes Directions' Paul DeGroot. BUT, here's the big but. "Expansion could also hurt the loyal systems integrator partners who not only move thousands of units of Windows and Office onto PCs, but also push the company's increasingly important server products. In 2006, Microsoft has to clarify how far it will go into managed solutions, and what parts of that business it will leave on the table for partners. "Microsoft needs to map out where its managed solutions effort is going, how it will differ from what partners are doing today, and how it will kick-start financial growth."

Hear hear. Microsoft has been consistent in its comments to CRN and to partners that it has no plans to build a huge services business. However, insiders report a different story, that the heat is on to get more reference accounts to be run by Microsoft IT.

#5: Re-refresh online strategy.

Leaked-on-purpose memos, and/or company blogs, do not a strategy make.

Last month saw Microsoft in the unenviable position of "leaking" a memo from CTO Ray Ozzie to generate buzz after the company's Windows Live and Office Live media blitz turned into a snooze fest (My words, not Directions')

First priority is to get the Microsoft "ad platform" up and running and better delineate its small biz offerings, writes lead analyst Matt Rosoff. Then, maybe Microsoft can really dent Google's franchise.

#6: Dynamics is a great name for the four someday-to-be-unified ERP brands. But to parrot a former Microsoft Windows exec, naming is like "putting lipstick on a chicken."

Oracle and SAP don't get small and mid-sized businesses yet, but they're getting warmer. And, sadly for Microsoft "results in 2005 didn't demonstrate that the [MBS] unit has the right size, channel, and product lineup to generate the business that Microsoft hoped to get from the acquisition of all these products," according to lead analyst Chris Alliegro.

#10: DeGroot says Microsoft made progress on licensing/pricing last year. Documentation is simpler and better, but the company needs to better link Software Assurance maintenance pricing and actual product cycles.