Microsoft Dips Toe In Service Provider Biz

Even as Microsoft executives reiterate the company's channel-friendly mission, the software giant's IT group is taking over technology management for a major customer--a move that could be construed as an attempt to compete with service provider partners.

Microsoft's IT unit is providing critical tech services for Energizer Holdings, St. Louis, the company confirmed last week.

The unannounced deal puts the Redmond, Wash., vendor in a service provider role that conflicts with its own partner base.

The fact that Microsoft IT and not Microsoft Services is doing the job may come as cold comfort to those partners, observers said.

Mike Adams, general manager of IT for Microsoft, confirmed the deal and did not rule out similar engagements in the future. The goal is not to profit from the paid engagement but to apply its best practices in a more heterogeneous environment than Microsoft itself fields, he said.

Microsoft is servicing Energizer at the customer's request, he said.

In the past, IT has briefed customers on campus and even visited some for troubleshooting purposes, but this is a ramp up of such activity, Adams said.

"This is a slight evolution, not a change in direction," he told CRN.

Some partners were blase. A West Coast integrator said he believes Microsoft will continue to leave the bulk of services to partners, as it has promised. Microsoft CEO Steve Ballmer often points to IBM's ownership of IBM Global Services as a reason service providers should ally with Microsoft.

But a Midwestern integrator said "conspiracy theorists could easily view this as a paid trial to see if there's a business model here for Microsoft." If Microsoft is looking for an outsourcing business model, he believes the company won't find an acceptable one.

"They'll discover they don't like the margins," he said. "Microsoft's gross margins may be under pressure but they waver between 65 and 68 percent. We're lucky to hit 30 to 35 percent."

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