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John Krikke, vice president at Onward Computer Systems, a Burlington, Ontario-based Microsoft partner, said he understands the business reasons behind the Small Business Server decision. His worries center on how Microsoft gave partners little warning about the change--and what that portends for Microsoft partner relations. "I think the messaging was not handled well," he said. "The communication was poor."
The Microsoft criticism from partners comes with many looking at the Windows 8 desktop product and services onslaught as not providing a big margin kick. A related CRN survey of nearly 100 partners shows that 75 percent rated the Windows 8 desktop product opportunity as low margin or average margin. What's more, 68 percent rated the Windows 8 desktop services opportunity as low or average margin.
Ballmer, for his part, said the margin question is skewed.
"The truth of the matter is we have a lot of great partners and they compete pretty hard with one another, which is really their nature," he said. "I think what we give our partners with Windows 8--and you saw that here at the partner conference--is the ability to help their customers do things that they couldn't do before. Whether the margin is X percent or Y percent, the real opportunity is to sell X or 2X or 3X or 5X, the ability to galvanize the customer base on new scenarios, new opportunities and really drive overall volume."
One of the biggest changes sure to drive big sales volume for cloud-computing-focused partners came at the conference when Microsoft unveiled the Office 365 Open program under which partners can resell the cloud application suite, buying subscription keys from a price list and billing customers directly from a price list--removing what had become a contentious channel issue. Partners say the Office 365 decision is a watershed moment, and they hope Microsoft will follow suit with other products such as Intune and CRM Online. (Officially Microsoft said no decision on extending that policy to other cloud products has been made).
"If InTune and CRM Online go this route, it will be a game-changer, an absolute game-changer," said David Geevaratne, president and co-founder of New Signature, a Washington, D.C.-based solution provider. "A lot of MSPs want to sell a bundle to their customers. A significant population of customers want one monthly bill for all their IT products and services. Partners love this opportunity that Microsoft has given them."
New Signature, a 100 percent Microsoft-focused shop, expects its sales to be up 59 percent this year to $10 million. Geevaratne said he expects even more dramatic growth as a result of the opportunities around Windows 8, noting that desktop PCs, laptops, tablet computers and smartphones will share the same core operating system technology--a claim Apple can't make.
New Signature is just the kind of partner Microsoft is betting on as it ramps up its cloud computing market offensive.
"If we came from a world of software, we are moving now to a world in which software gets embedded in hardware and in cloud services and we are going to continue to be the company that is most channel-friendly, if you will, in embracing that," said Ballmer.
What's more, he said, partners have nothing to worry about with regard to passionate advocacy from both himself and Turner.
"We are all in," said Ballmer. "We are all in as the world gets to be a world of devices and services powered by software. We are all in with the channel."
Rick Whiting contributed to this story.
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