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Partners say the consumer-focused Microsoft Surface tablet strategy is also being hobbled by the lack of a significant price delta between Surface for Windows RT and the Apple iPad.
Microsoft Surface for Windows RT tablet -- without the Surface Touch Cover keyboard -- is priced starting at $499 for an entry-level device with 32 GB of storage. That's the same price as the Apple iPad with 16 GB of storage.
Partners say pricing will also be an issue for the Windows 8 Pro-based Surface tablet, which will carry an $899 starting price and a top price of $999 minus what may well be Microsoft's biggest advantage over the iPad --the Surface Touch Keyboard. The Surface Touch Keyboard is being sold separately by Microsoft for $199.99.
Chris Hertz, CEO of New Signature, a fast-growing Microsoft-exclusive solution provider based in Washington, D.C., said Microsoft's move to push Surface through the retail channel indicates that the company is closer to putting it into the IT channel as well.
"Microsoft is not trying to cut out the channel. I believe the Pro Surface product will go through the channel," Hertz said. "Microsoft has always said they are all about the channel. Conspiracy theorists are wrong about Microsoft going direct and cutting out the channel."
Furthermore, Hertz said he believes Surface Pro will be a big hit.
"I was just in three meetings today, and customers were really excited about Surface," he said.
A senior executive for a large Microsoft enterprise partner, who did not want to be identified, said Microsoft's pricing and distribution strategy are limiting sales of Surface RT. "Giving RT to Staples doesn't help us on the business side," he said.
The executive said his company has seen significant interest in Surface RT, but has been forced to send those customers to a Microsoft retail store or Microsoft.com. Allowing partners to sell Surface RT would have opened up a wide range of conversations that could have led to bigger Microsoft software solution engagements around software offerings like SharePoint and Lync, said the executive. That's too bad, the executive said, because those conversations could have led to high-margin solution sales for his company.
Instead, the executive said, his company has been forced to seek out lower-margin iPad-based engagements with Apple. "Ninety-five percent of the companies we are doing deals with are buying iPad," he said. "The guys in Redmond need to get out of the ivory tower and talk to partners like us," he said. "Windows 8 is a great OS, but they screwed up by not putting a start button on it and not putting Surface through solution providers. They need to stop drinking their own Kool Aid."
By not working closely with solution providers in the business market, Microsoft has failed to capitalize on what may well be the iPad's biggest shortcoming, said the CEO for a large enterprise Microsoft partner, who did not want to be identified. "The iPad is an entertainment device," he said. "It's the anti-boredom device. It's for music and movies. It doesn't improve productivity like Microsoft does with Office. If Microsoft wanted Surface to go into the business market, they made a big mistake."
As far as he is concerned, the CEO said Microsoft's decision to focus on the consumer market is just one more sign that the software giant just does not get the channel. "Microsoft is not really a channel company," he said.
Still, New Signature's Hertz said his faith in Microsoft's channel focus remains strong.
"Microsoft has repeatedly stated the channel is important to them," he said. "Microsoft has always been good to the channel. They don't have the capacity to do it on their own. They would be gutting their business if they went direct and abandoned the channel. They have one of the most effective channel organizations in the history of business. That is one of the big reasons they have maintained market share. People can complain, but nothing Microsoft has done is disruptive to the channel. The last several years Microsoft has been relying more heavily on the channel, and it has been good for our business."
PUBLISHED DEC. 14, 2012
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