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Partners Still Perplexed By Microsoft's SMB Services

As the dust settles around Microsoft's announcement that it plans to sell hosted Sharepoint and Exchange services to SMBs, some VARs still can't figure out how it won't negatively affect the channel.

Ever since Microsoft began articulating the value proposition for its version of SaaS, called software + services, the vendor has said it gives channel partners flexibility by allowing customers to access services in three ways: on-premise, hosted in the cloud by Microsoft, or hosted by a VAR.

But some partners believe the recent Exchange and Sharepoint moves have less to do with flexibility and more to do with Microsoft displaying its services muscle in response to Google, which last month unveiled Google Sites, an offering some industry figures have taken to calling a "SharePoint Killer."

"Microsoft is trading the partner loyalty in order to battle Google for the segment of the IT consumers that feel IT services are worthless," wrote Vlad Mazek, a Microsoft Exchange MVP and Small Business Specialist based in Orlando, Fla., in a blog post earlier this month. "In a way, this is no different from what Google is offering, but Google is at least openly waving a middle finger to its resellers and cutting straight to the end user."

"Moves like this make me realize that I am no longer in a partnership with Microsoft, but just sending them money so they can crush me faster," Mazek continued. "Microsoft got to where it's at by working with partners, but now their 'giving more choices to the customers' means 'getting more ways to work with the end user directly without the middleman."

Dave Sobel, CEO of Evolve Technologies, a Fairfax, Va.-based solution provider, said Microsoft's recent SMB services moves convey a different message to the channel than it has traditionally delivered.

"Microsoft has always done the product awareness approach to marketing, as opposed to saying 'You can get it from us.' This is the first time they've had a marketing campaign that's much more about offerings you can buy from Microsoft," Sobel said.

But Eron Kelly, director of product management in Microsoft's business online services group, dismissed the notion that Microsoft might eventually end up opening up a direct avenue to customers with its recently unveiled SMB SharePoint and Exchange services.

"From the very beginning of any conversation we have about new services, we're always thinking about partner opportunities to add value and be more successful. To alienate partners, or do something that would prevent them from participating, would be short-sighted on our part," said Kelly.

Some solution providers are confident that future opportunities will emerge in software + services to provide a higher level of hands-on support for the types of managed solutions that Microsoft is likely to offer, such as integration and delivery of utility solutions that go beyond the scope of Microsoft's offerings.

"There are still going to be opportunities for VARs to add value in areas like guidance and how to secure the services," said Ric Opal, vice president of Peters and Associates, an Oakbrook Terrace, Ill.-based solution provider. "Software + services may amount to a revenue shift for us, but it won't matter, because the revenue will still be there."

Daniel Duffy, CEO of Valley Network Solutions, a Microsoft Gold partner in Fresno, Calif., isn't worried about Microsoft selling services directly to customers, but for a different reason. In Duffy's view, the SaaS model won't reach its potential until issues with data integrity and security, pricing, and application availability in WAN environments have been ironed out.

"I don't see SaaS as a viable, commercially-realistic business solution until more of the details are worked out. I, for one do not want to run my client or back-end business applications on someone else's server, and Microsoft is no exception," Duffy said.

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