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Microsoft Channel Chief Reports Uptick In Partner Additions, CSP Growth

Channel Chief Gavriella Schuster says Microsoft is adding new partners at an even faster rate as demand rises for cloud solutions such as Azure and Office 365.

Microsoft Channel Chief Gavriella Schuster said on Tuesday that the rate of growth in the company's partner community is accelerating--as is the growth of revenue for partners in Microsoft's Cloud Solution Provider (CSP) program.

During her annual "State of the Channel" conference call, Schuster reported that Microsoft is currently adding new partners at a rate of more than 7,500 each month. That's up from the 7,000 new partners per month that Microsoft was adding as of last June, when Schuster spoke with CRN, and up from roughly 4,000 to 4,500 partners per month as of two years before that.

[Related: Microsoft Channel Chief Schuster On Why Multi-Cloud Partners Are 'Doubling Down' On Azure]

Meanwhile, CSP is Microsoft's "fastest-growing licensing model” with 31-percent growth in the past 12 months, said Schuster, who is corporate vice president for Microsoft's One Commercial Partner organization. Partners use CSP to provide Azure and Office 365 to customers on a subscription basis.

"Through CSP, partners are embedding Microsoft technologies into their own solutions, and are delivering more differentiated long-term value for their customers," Schuster said.

Microsoft reported that partners are currently serving more than 2 million customers through CSP.

Ric Opal, principal at Oak Brook, Ill.-based SWC Technology Partners, a BDO USA LLP company, said his company has been seeing rapid growth in its Microsoft business—across Azure, Microsoft 365 and business applications. And the CSP transaction model has been important to helping drive the growth, Opal said.

"Our business has been very strong" with Microsoft's solutions, Opal told CRN. "They have a diversity in their offerings that I believe offers partners choice and an ability to differentiate themselves in a very competitive market."

Schuster also pointed to traction that Microsoft has been seeing in Microsoft's co-selling program, which gives incentives to internal salespeople to work more closely with solution providers. During Microsoft's quarterly earnings call last week, CEO Satya Nadella disclosed that the co-selling program has generated $8 billion in contracted partner revenue since debuting in July 2017.

Additionally, Microsoft's Azure Expert MSP program—which includes partners with the highest degree of capabilities and skills for delivering managed services on Azure—has seen strong results since launching last July, Schuster said. Partners in the program are each generating between $100,000 and $2 million a month in Azure consumption, and the program has expanded to 43 partners up from 32 initially, she said.

Partners that have recently joined the Azure Expert MSP program include 10th Magnitude, Schuster noted.

Ultimately, as support ends for SQL Server 2008 in July—and as Windows Server 2008 phases out in a year—there are tens of millions of SQL and Windows Server instances "waiting to be migrated to Azure," Schuster said. "We estimate the end of support opportunity for partners is around $50 billion when it comes to services and related business."

For Microsoft's second quarter of fiscal 2019, ended Dec. 31, intelligent cloud revenue jumped 20.4 percent to $9.38 billion, up from $7.79 billion the year before. The growth was fueled by a 76-percent spike in Azure revenue.

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