I remember sitting with you on July 10th last year when Kevin Turner said Microsoft was all about the channel.

See my comments at the time

Then, he spelled out a future in which Microsoft would sell directly to end users without the pesky partners getting in the way.

At least Microsoft isn’t hiding or being sneaky. They’re pretty damn honest about what they’re up to.

Yeah, anyone who has thought about this has seen in coming for a long time. I don’t think it matters that much except for folks who really want to focus on infrastructure. There is always work to do.

So, how are you going to deal with this, Vlad? Sure, it will help your business in the short term, but Microsoft will end up driving prices down so low on this (already) commodity service that only massive scale will be able to compete. I don’t see anyone in the market (except google) being able to compete with them. When the prices get pushed further and further down with their marketing engine, the customers will be deciding where to go…not the partners. Do you have a strategy in mind when you are competing with the 800 lb gorilla? Or are you just going to clean up while you can and sell before that happens (and you are the girl)? Just curious.

Karl,

Yup. And I bet you a year from now people will still be confronting both of us for not saying it loudly enough. It’s a sad day when it takes a naughty picture to clear things up for people.

Learn.Prepare.Succeed!

-Vlad

Matt,

For what its worth, OWN currently has a bigger infrastructure than Microsoft and we’ve been running it for a decade. Microsoft is still building theirs, is likely years behind in doing it internationally and their business model is… “unpalatable” … to the entrepreneurs who want to actually serve their clients, not resell them.

The way OWN competes, regardless of how low Microsoft goes, is on service, support, flexibility and security. Microsoft can and will drive the value and price of Exchange and SharePoint to $0 in order to defeat Google. I suspect that will be their doom when they finally have to admit that their software with all the features and flexibility can only compete with Google if its free and even then may not be adopted seriously. Again, I am not sure what they were thinking but I am happy to no end that they have actually done it.

To translate it somewhat less politely, it’s like you competing with Microsoft PSS India Tier 1 support. How much business are you losing to the $259 a call “fix my server” offering from Microsoft?

Their online deal is the same in my opinion. But only time will tell.

-Vlad

I’m not surprised that Microsoft is back pedaling. But don’t expect them to go too far back. Think of it like the oil industry. When consumers complain they back the price down $.25, then the sneak it up past the original pain point – rinse, repeat, rake in profit.

The problem I see with Microsoft’s strategy is that they are smiting their sales force. Since when is that a good idea? Exchange is nothing without its sales force and without its champions. Take those away and it opens up the playing field to the competition like never before. It’s partners that have made Microsoft sucessful and are the unpinning of the whole house of cards.

Yes, a lot of IT companies will go belly up as will a lot of hosting companies. In a severe downward pricing pressure market no one can survive. Microsoft has long had this strategy but always before it was aimed at the competition. Now it’s aimed at its partners. Surely, this marks the end of Microsoft dominance. Smiting your sales force, your partners, your distributors, your champions, can’t be a good long term business strategy. Its a very sad thing to watch.

Couldn’t agree with you more Amy, on all points.

Hosting operations will be the first to die in my humble opinion. Those that have not developed a large presence or a support based on relationships will be the first ones hitting the deck as people flock to what they used at their last job.

Just goes back to showing that service is king in the service industry and the first ones to drop out are the ones that never should have been in this business to begin with.

-Vlad

Hi Guys

Now DELL is laughing, because the pressure is off them for once. Who will be the next whipping boy in the SBSC community. DELL first, Microsoft second….

There are opportunities here, network management and data security is all a commodity here, the real dollars are going to be in people and process management.

Time to learn how business operates and smell the opportunity that exists in the marketplace. There is one here, it is called Process and People Management.

Cheers

Stuart Crawford
IT Matters Inc.
in Houston
http://www.stuartcrawford.com