Microsoft Rallies Partners Around Midmarket Server

Between now and September, Microsoft is offering solution providers who attended this week's partner conference a 1 percent commission on all Midmarket Server sales financed by Microsoft regardless of the size of the deal, said Orlando Ayala, senior vice president for small and midmarket solutions and partner group (SMS&P), speaking at the Minneapolis event.

"This segment represents one of the biggest opportunities out there for partners," said Ayala.

He estimates this $321 billion midmarket is the fastest- growing opportunity for Microsoft partners because sales of IT equipment into this space are growing at 12 percent a year. Microsoft estimates that the segment represents $1.2 billion in software and services opportunities for Microsoft and its partners.

In addition, he noted that there are still roughly half a million NT servers installed in this market segment, which represents a significant upgrade opportunity.

To facilitate that process, Microsoft developed the mid-market server to create a 20 percent discount for customers buying that packaged offering over individual components such as Windows Server 2003 standard edition, Exchange Server 2003 standard edition, a Microsoft Operations Manager License and 50 client access licenses. The goal is to upgrade 31,000 of those NT servers during fiscal 2006, which kicked off July 1.

Microsoft's Open License Value program should help facilitate this process by essentially guaranteeing customers multiple product upgrades that can be paid for over the life of a three year contract, he said.

As part of that program, Microsoft has now lowered the price for participating in the program during the first year of the contract, which he said should free up more money for services revenue for partners. In addition, Ayala said that Microsoft has now reduced a complex 30 page contract to a five page document that is much easier for customers to understand.

Unlike the Microsoft Small Business Server, the midmarket server is a "soft bundle" that does not include the same level of integrated installation routines. According to Microsoft group vice president of worldwide sales, marketing and services, Microsoft's long term intent is to provide a more sophisticated set of installation routines to harden the bundle.

In meantime, he said the soft bundle does not represent a threat to the technical services revenue that solution providers derive from installing Windows server and related products.

Brian Okun, vice president of sales and marketing for Chips Computer Consulting in Lake Success, N.Y. said the midmarket server is "awesome" because it creates the opportunity sell a minimum of three additional servers to run the full Windows Server 2003 Midmarket suite.

"It takes a way a lot of cost on the acquisition side than could be reapplied to services to the partners," he added.

As for the long term threat to technical services revenue, Don Mishory, practice leader for Whittman Hart in Chicago struck a philosophical note.

"The secret to being successful with Microsoft over the long term is that you must stay 12 to 18 months ahead of them when it comes to solutions."