With Microsoft in the midst of transforming itself into a devices and services company and a corporate reorganization rumored to be imminent, partners headed to next week's Worldwide Partner Conference will be looking for clues about how they fit into Microsoft's long-range plans.
"Clearly the whole landscape is changing. There's probably some agita out there," said Andrew Brust, CEO at Blue Badge Insights, which provides Microsoft-related consulting services to Microsoft customers and channel partners. "It's a little less clear how partners fit in," he said, referring to the "services and devices" focus and emphasis on cloud computing. "I think for a lot of partners it's cause for some concern."
David Powell, vice president of managed services for TekLinks, a fast-growing Homewood, Ala.-based cloud services provider whose offerings include hosted Exchange, said some partners are being neglected by Microsoft. He sees TekLinks falling into the "forgotten middle" as Microsoft focuses on Large Account Resellers selling software licenses at one extreme and its smallest partners selling Office 365 cloud subscriptions at the other.
"Folks like us are not getting the vendor love from Microsoft," said Powell, noting that TekLinks is one of the fastest-growing solution providers in the country with $93.6 million in sales in 2012. "Companies like ours that were early on in the cloud before Ballmer got on stage saying Microsoft was all-in in the cloud are being forgotten."
Powell said Microsoft has so many different businesses that it is hard for partners to provide a cohesive Microsoft story to customers. "Are they a search company competing against Google? Are they a cloud services provider competing against Amazon? Are they a gaming company? Are they a business intelligence company with products like SharePoint? The answer is they are all those things. Cisco CEO John Chambers has done a good job of navigating Cisco away from all the adjacencies. That has made it easier for us to partner with Cisco and drive value. Microsoft needs to tighten up its focus."
Rumors have been swirling for several weeks that CEO Steve Ballmer is planning a management shake-up throughout the company -- possibly as early as the week of WPC, according to a Bloomberg report. That's adding a note of uncertainty to the pre-WPC atmosphere.
Ballmer was said to be considering putting Skye president Tony Bates in charge of acquisitions and relationships with software developers, and put current Windows chief Julie Larson-Green in charge of the company's hardware operations for all devices, according to the Bloomberg story.
Brust noted that changes at the executive level can result in changes at the partner program level. Microsoft made major changes to the Microsoft Partner Network (MPN) three years ago, including stepping up requirements for getting into the program's top tiers and introducing the company's "competencies" initiatives.
NEXT: Some Partners Feeling Left Behind
"I'll be looking for a sense of overall direction," said Ric Opal, vice president at Peters & Associates, a Chicago-area Microsoft gold partner. "I would like some idea of how we want to shape our business going forward."
Opal was specifically referring to Ballmer's keynote speech Monday, often a forum for the chief executive to spell out his vision for the company and its channel partners. Opal's comments echoed other channel partners who say they hope to leave Houston with a clearer idea of where Microsoft is headed.
Some 16,000 Microsoft partners are expected to attend this year's WPC at the George R. Brown Convention Center in Houston.
"We want to understand the company's key initiatives, new products and partner incentives," said Brent Carney, director of strategic alliances at Slalom Consulting, a Seattle-based Microsoft gold cloud alliance partner.
Partners will be seeking information about Windows 8.1, the upcoming upgrade for Windows 8, last year's release of the company's flagship operating system that introduced a revamped user interface and support for touch-screen tablets. Some industry observers have said Windows 8 is a slow seller, although Microsoft has said it has sold more than 100 million licenses.
Windows 8.1 is slated to launch later this year and is expected to correct some of Windows 8's shortcomings.
This week NetMarketShare, which monitors online activity, said Windows 8 ran on 5.1 percent of all computers in June, surpassing Microsoft's much-maligned Windows Vista.
Windows 8 "is the Vista of our generation," said one disgruntled partner who asked not to be identified. If the re-engineered Windows 8.1 is successful, the partner said he would recommend it to his customers. "If not, we'll probably skip a generation and wait for Windows 9 or even 10."
The partner noted that cloud computing "is where all the activity is" on Microsoft's part. "I'm worried they will think everyone wants cloud."
Brust noted that, in some cases -- SharePoint being one example -- Microsoft has introduced new functionality in cloud versions of a product before making it available in the on-premises edition. That's left some partners feeling like their connection with Microsoft is slipping away.
NEXT: Some Partners Buy Into The Microsoft 'Devices And Services' Vision
Some partners, however, are fully on board with Microsoft's strategy. "We love the direction Microsoft is going," said Chris Hertz, CEO of New Signature, a Washington, D.C.-based Microsoft partner that offers a range of IT services, many built around Microsoft products including the vendor's Office 365 cloud applications.
Hertz noted that Microsoft has released upgrades of many of its core products, including Lync and SharePoint in the last year. "And Microsoft has stepped up their co-selling and their co-marketing efforts," he said.
While some partners worry that Microsoft's focus on cloud computing and services will create distance between the vendor and its channel partners, Hertz begs to differ. Microsoft "has to have partners driving for them," he said, adding that with the cloud model customers are as dependent on partners for advice and guidance as ever. "We're more valuable in the partner ecosystem."
Hertz is interested in hearing more at WPC around support for partners and customers who adopt Microsoft's cloud business models.
"Office 365 demand has been increasing and we're in a very good position to take advantage of that," Slalom's Carney said, noting the company just closed a deal with an East Coast customer for 60,000 Office 365 seats.
Carney wants to be sure Microsoft is committed to continuing -- or even increasing -- the Office 365 incentives the company offers partners for pre-sales and deployment work, along with the partner-of-record fees. He also pointed to the program that has provided Slalom with funding to help cover the cost of building proof-of-concept applications for Windows 8. "We'd like to see continued support for all these different [incentives]" he said.
"The Office 365 numbers are very compelling," agreed Opal at Peters & Associates, which also offers the cloud application service to its customers. That business "has been quite healthy and growing," he said.
"We're seeing a lot of uptick [in demand] in the Microsoft cloud," said Chris Pyle, CEO of Champion Solutions Group, a Boca Raton, Fla.-based Microsoft partner that also works with Office 365 and offers its 365 Command administration tools for the Microsoft cloud applications.
On the more technical side, Pyle hopes to hear more at WPC about Microsoft's plans for integrating its Skype VoIP with the company's Lync communications software. He also wants to learn about Microsoft's directions with its Active Directory Service technology in Windows Azure, a critical element in Microsoft's strategy for identity management in cloud computing.
While many partners are riled because Microsoft has limited channel sales of its Surface tablet computers, Opal said he's focused on developing services, such as security and asset management, around mobile devices.
And some partners see WPC as a chance to meet other partners and discuss possible opportunities. David Kohar, chief customer officer at Zero2Ten, an Alpharetta, Ga.-based partner that works with Microsoft's Dynamics CRM applications, is seeking possible alliances with solution providers that work with Microsoft's Dynamics AX and NAV ERP applications. "We're seeing a lot of complementary business opportunities with partners that market those solutions," he said.
Opal is likewise looking for Platform-as-a-Service companies that complement Peters & Associates' Infrastructure-as-a-Service offerings. "You can't miss the partnering opportunities of WPC," he said.
PUBLISHED JULY 3, 2013