Ballmer: Microsoft's SaaS Plan Brings Partner Opportunities

In fact, in an interview with CRN, Ballmer detailed for the first time how partners will play in each market segment going forward.

The sweet spot for Microsoft Gold partners will be in the midmarket where he sees potential for strong SaaS adoption, and the company is working on the business model to support that.

Microsoft doesn't have any details on a SaaS commission structure for partners, but Ballmer stressed that the Redmond, Wash.-based software giant will depend on partners to sign up new customers. "There will have to be a business relationship that facilitates that," he noted.

Ballmer said that each market segment will have a "different time frame" for SaaS adoption.

In the enterprise, SaaS will hit big initially in a small number of departmental and/or focused applications, Ballmer said, citing Salesforce.com as an example. Bigger opportunities remain down the pike. "I don't expect [SaaS] to be a raging phenomenon [in the enterprise] except in specified ways for a number of years yet," he said.

Ballmer, who has faced immense pressure of late and has even gone to Wall Street to reassure analysts, is clearly focused on driving the company into the SaaS era. He and Microsoft are banking once again, as they did with the Internet, that while they may be late to the table, the SaaS feast won't be gone by the time they're ready.

SaaS—as practiced by new-age software companies such as Salesforce.com, WebEx and NetSuite—already is a factor and has certainly garnered a huge amount of ink and pixels.

Microsoft got publicly serious about the subject last fall when Chairman and Chief Software Architect Bill Gates and CTO Ray Ozzie discussed ad nauseam their take on simple-to-use free or ad-supported services. Interestingly, nary a mention was made of partners or the role they could play in this scenario. Gates and Ozzie's push is for Windows Live, which is a new take on MSN, and Office Live, which is a planned spate of hosted SharePoint applications for very small businesses and consumers. Ozzie is slated to talk about this push again at Tech Ed this week in Boston.

Ballmer maintains, however, that partners servicing all customer segments eventually will be able earn their own keep in the Microsoft SaaS world. Midsize companies, those with a few IT people and limited resources, are potentially the biggest market for such goodies as antispam and antivirus services, according to Ballmer. Microsoft bought FrontBridge in July 2005 to gain a toehold there, although that market, too, is still developing.

The nearer-term gold rush will come in small companies—those with maybe one or two IT people or none, Ballmer said. That's the sweet spot for Office Live, and there will be a rich market for partner-provided services there to do custom templates and applications that will ride the Office Live infrastructure, he said.

In the small-business market, where registered partners and small-business specialists now hold sway, "I think we'll have good, complementary offerings between Small Business Server [and] an active channel product in Office Live. What we're trying to do is have some things on Office Live and some things hosted on their own premises. [So at] every level—integrator, developer, reseller—there'll be opportunities," Ballmer said.

Microsoft now has four Office Live partners, but Ballmer said that is just the beginning.

"When we get the model down, one of our big attractions should be [that] we'll have a lot of partners doing both vertical apps and customized apps that work with Office Live," Ballmer said. "I see a big opportunity in there for our partner community. We don't have anything to talk about at this stage. I'm sure we'll want partners to sign up new customers, and there will have to be a business relationship that facilitates that."