Tug-Of-War

While Ballmer and Chambers pledged to keep their competitive jockeying from sullying customer experiences, they couldn't resist throwing a few sharp elbows. Asked about Cisco's deepening presence in the software market, Ballmer answered, "I have great respect for John and Cisco as a company, but in anything that they do and we do, I have more respect for us." But Microsoft and Cisco are good enough buddies to handle that kind of trash talk, Ballmer quickly added. "That's the thing we have learned to say to each other, and that's OK," he said.

Partners and their clients sometimes get caught in that tug-of-war.

"These are both proud companies, and they both believe their products are best. They have aggressive sales teams," said Dimension Data executive Jere Brown, CEO of the South Africa-based communications specialist's Americas division. "Sometimes we didn't see that the teams were working together to solve customer problems, and we did hear from customers that greater collaboration between those two would be beneficial. Of course, as an integrator—to us, that complexity is an opportunity."

Communications services firm Getronics, in Amsterdam, counts Microsoft and Cisco as two of its three top vendor partners (Dell rounds out the triumvirate). Making recommendations to clients gets harder as product overlap increases, Global Solutions Director Lee Nicholls acknowledged. "We anticipate this will be a struggle for us, to be able to say which product is better," Nicholls said. "For example, a lot of companies are using the Cisco SoftPhone on top of Windows. Microsoft will want to see that replaced with Office Communicator."

For now, solution providers say the key is playing to Cisco and Microsoft's historical strengths. Cisco has a solid reputation and a history as a communications infrastructure provider; for companies already invested in its stack, Getronics recommends sticking with the existing infrastructure but presenting it through a next-generation interface like Office 2007. For customers willing to experiment more, Microsoft's new technology is unproven but compelling.

"Microsoft has the freedom to put client functionality directly inside Office. Cisco can't really compete with that," Nicholls said. "But right now, even when we push a big Microsoft infrastructure, there's lots of networking and switching hardware running, and it's almost always Cisco. It's not quite a win-win deal for Cisco, but they never lose."

JK Computing's Brubaker said his customers aren't ready to experiment yet with Microsoft's VoIP wares. "Where products overlap, we'll sell the Cisco stack," he said. "That market is very brand-driven, and at this point, Microsoft isn't a player."

To maximize the opportunities, VARs need Cisco and Microsoft to ensure interoperability despite their rivalry—which is just what Ballmer and Chambers pledged to make happen.

"This is, candidly, being driven by our customers," Chambers said. "Companies don't want issues of competition to cause them not to be able to interoperate effectively in their own environments."

That's a lesson Microsoft took decades to learn, but partners say the company now seems to be taking to heart. In the time since Chambers and Ballmer's peace powwow, Dimension Data's Brown said he's already noticed a thaw between the two vendors' sales teams: "What I've seen in just a month is a greater willingness to cooperate and collaborate," he said. "When two leaders like John and Steve get up in front of their organizations, it's a big influencer."