Comments on: Thank you Microsoft (NSFW)

By: johnw

johnw — Thu, 10 Jul 2008 21:01:38 +0000

That revenue share MSFT is offering is paltry, and a fraction of what partners get for selling license products. The amount you make on day one selling license product dwarfs what you will make in a subscription model over three years (at these proposed rev shares).

If you look at SAAS providers that are currently selling in the channel, they give much more. NetSuite for example gives a minimum of 30% of the fees in the first year, and 30% every year a subscription is renewed. That’s the level you need to make transtion from a license model to a subscription model.

By: Vlad Mazek - Vladville Blog » Blog Archive » Thank You Microsoft

Vlad Mazek - Vladville Blog » Blog Archive » Thank You Microsoft — Thu, 10 Jul 2008 17:36:24 +0000

[...] much as I can’t agree with their message and direction, I have to extend the huge kudos to the Digital WPC team at [...]

By: matt

matt — Thu, 10 Jul 2008 16:53:21 +0000

I’m curious how some of this will play out with the hosting companies. Over the years, Microsoft has worked closely with hosting companies to understand their operations, the work-flow, etc. At what point will one of these hosting companies realize that MS was most likely gathering competitive information for their own initiative? Again, we’re back to realizing that Microsoft can never be trusted regardless of what they tell you about their intentions. When will the lawsuits start, especially from companies like Intermedia where MS has had a close relationship and most likely has garnered competitive information from them without telling them they’ll be launching their own competing offering? I can’t tell you how many times I’ve sat at summits, in meetings, and have had Microsoft tell their partners that they have no intention on competing or selling Exchange.

-matt

By: vlad

vlad — Wed, 09 Jul 2008 16:46:55 +0000

Yan,

I actually see the market developing in a whole different way. Remember, there is a generational gap in terms of technology adoption. We had people who didn’t do faxes. Then we had people that didn’t do computers. Then we had people that didn’t do online banking and insisted on cash and check.

Technology waits on noones incompetence.

I still think the future with Microsoft is bright in some markets and some verticals, however, it is clear that the infrastructure premium that came with designing Microsoft networks in SMB (we specifically work in the upper midmarket) may become a thing of the past but instead of opening the doors to cheaper Microsoft solutions it might just go to the more open or free solutions provided by other providers and homegrown solutions by Microsoft partners themselves. If there is no incentive for me as a business to promote Microsoft products (we’ll assume 6% of $15 per user per month is equivalent to nothing), why should I not promote my own that cost $0?

I look at this move by Microsoft as trying to fight with Google and Apple by severing their own head and trying to throw it at the Google and Apple that are running by them.

Again, I am not sure what they are thinking but my god do I love them. They have already sent a tidal force of partners my way and I can’t do anything but be enormously thankful to them.

-Vlad

By: Yan Herndon

Yan Herndon — Wed, 09 Jul 2008 07:14:53 +0000

well as long as MS tech support sucks as bad as it does now my clients will never go to a hosted model like this. But for those that haven’t been reading this blog for a year and/or the 500 industry rags this is a fairly big shake-up. SAAS / managed services etc are the next wave.

I agree with most of what you say, including it not being MS or any other vendors problem to build/support/coddle or babysit it’s partners’ businesses its still scary as shit to know that I need to create a new business model in the next 18 months so that I will be viable in 36 months..

But in reality. for the next 10 – 15 years there will be enough computer illiterates around and the hardware/software will still be crappy enough to need some break / fix service from someone other than the weird kid from Geek Squad.

By: vlad

vlad — Wed, 09 Jul 2008 05:34:40 +0000

I’m biting my tongue as I type this, but I have to agree with Schrag on this one. Microsoft has been indicating this move for over two years and even announced it at last WPC. Just because you ignored it until today doesn’t make Microsoft the devil for trying to do business with the end user directly. It’s their prerogative, you had plenty of time to plan your response if you were so concerned about someone crossing your turf.

Is this effectively screwing all the Microsoft partners who made high margins off Microsoft products? Yes. Is this a surprise move? No, not to anyone that was paying attention.

-Vlad

By: Fred G

Fred G — Wed, 09 Jul 2008 02:47:26 +0000

It’s not solely that Microsoft is pushing a low cost solution, it’s the fact that they are devaluing the partner relationship that they have worked so hard to build up. Under S+S, we will no longer own the client relationship or manage prices, and Microsoft will be able to upsell directly to our clients without giving us so much as a reach around.

At least there are solid, partner friendly competitive offerings. I will be filling out the OWN partner application soon.

By: David Schrag

David Schrag — Wed, 09 Jul 2008 02:20:53 +0000

I don’t understand. Microsoft is trying to provide a valuable product/service at a low cost to the end user, and this is a BAD thing? I guess you folks were pretty upset about the invention of e-mail, too. That really sucked for the fax machine partner community.

By: Casey W

Casey W — Tue, 08 Jul 2008 22:25:35 +0000

Just finished reading the reports around the net and this doesn’t impact us one bit as we already offer OWN enterprise hosting with a ton more storage and actual support.

I am so surprised by Microsoft tho, they have clearly lost their mind. I always read your blog thinking you’re just joking but you’ve so far been 100% on the money. This is a response to Google Apps which I have never seen used in any business anywhere and they just devalued Exchange, SharePoint and the whole solution stack by throwing us partners under the bus.

Thanks Microsoft. Though unlike Vlad I am being very insincere.

By: William Ward

William Ward — Tue, 08 Jul 2008 20:01:44 +0000

Message from Microsoft seems to be clear: Get a hosting partner to supplement your current business or we’ll crush your business with our offering.

Thank god for Vlad and OWN. Talk about a business that understands partnerships, perhaps Microsoft needs to take a few pages out of this book on how to do business with partners right.

After today Microsoft is in the same book as Dell if you ask me. Partnerships in this space seem to be a thing of the past.