Why is it that people only seek to open up the community channels, ask for feedback, have an ongoing conversation and attempt to win hearts and minds after they have launched a nuclear assault?

In case you have been out for the past week, last week Microsoft made an announcement that due to the pressures in the marketplace from Google, Apple, SalesForce and others it has to change it’s business model to be direct with the customer. While traditional business model will still be there, Microsoft will push for more and more direct business.

On the face of it, this is nothing new as Microsoft has already competed in consulting with Microsoft Consulting, as well as direct financial and licensing relationship with the customers with Software Assurance and Microsoft Financing. The new angle in the conversation pertains to the Microsoft offering ongoing services to the client which rightfully entitles them to fully managing the client, marketing solutions that compete with the current technology or support provider, bringing in their preferred partners instead of the ones currently in the account, etc.

Was Microsoft simply foolish when they came up with the S+S model that effectively destroys their partner community? Microsoft is a lot of things but they are not fools. In the process of pricing and designing services you look at what your competitors are doing.

I was put through the same cycle of advisory blindness when Google purchased Postini. “But boss, they are advertising their prices on their homepage with one-click purchase, can’t we do away with the partner program application?” In short, no, because we are a partner company.  Somehow people failed to remind Microsoft of that when they me S+S ed up their strategy. I’ll tell you exactly what they did - they looked at the Google Apps or SalesForce and thought:

“You know what, instead of pushing this through Volume Licensing that requires a lot of paperwork why don’t we just do what Google does and we’ll even one up it, we’ll give them 6% commission for just doing the referral. Let’s face it, nobody that is interested in this will work with the partner anyhow, and they get a few bucks out of every conversation so we can go direct and be partner friendly at the same time!”

Where Microsoft lost it’s partner community in the me S+S is in the fact that we know their business and their business practices better than they do. We know how Microsoft markets. Sign up for a few newsletters and they give you a few more. One group pushes another and the TechNet subscription offering with an enticing free software offer comes up in the sidebar. Soon even Microsoft Action Pack and MPAN find their way into the newsletter. Coincidence? No, just trying to break into the account with a Microsoft solution. Genius. Want to see how this plays out for you when you recommend or offer Microsoft solutions?

Microsoft owns the client. They need to stay in touch with them and offer them valuable services of course. Why not use the opportunity to upsell?

    Click here to buy Vista Ultimate, now 30% less!!!

Partner just lost a licensing deal. Microsoft should also be an active participant in the community. So it should naturally invite it’s customers to local events where material can be tailored for the customer that is not managed by a partner.

    See how easy customizing CRM is? Let’s do a quick marketing blitz!

Partner just lost on the advisory fees, consulting and perhaps further sales. But what is the ultimate exit?

Growing? Need local servers? Need managed services? Want help with migration from Lotus Notes or SalesForce? Well check this out, our partner locator. Which ZIP code do you live in sir?

Quick question, who climbs to the top of the partner locator? The partners who take clients best interest and recommend software and solutions that make sense and not ones that collect the most PAM and Microsoft Partner Program Points? Good night.

Let me repeat: Microsoft is not a fool. They know what they are doing. They likely have a ton of metrics and numbers to justify the fact that the SMB consulting space should not exist beyond a certain level. To an extent, I agree with them in that and have written extensively on how you can avoid falling into the dinosaur herd.

Microsoft made a fatal mistake in it’s direct approach because it showed it’s hands.

No number of adjustments to the course is going to make partners feel easy about the long-held suspicion that Microsoft is after our clients. They just came out and confirmed those fears, laid down the rules of the game, pegged the partner value at 6%, dictated ownership of the client and the right to do with them as they please.

Where does this leave you? Well, you could jump the crocodiles from one solution after another and hope to stay one step ahead of Microsoft as they move all their applications to the cloud and make the on-premise or partner solution unprofitable or unjustifiably expensive.

Does the significance of the problem make sense to you yet?

Does it now make it painfully clear why I’ve written so many sharp articles bashing the mindset of SPF and riffraff? Did you listen to me all this time that I’ve been waning you about the impact the SMB space will feel as the complexity of the solution spectrum goes away? Do you now understand the value of having a business over a specialty and a passing hobbyist interest in making a sustainable wage without taking it seriously? For your sake, I hope it did. You may not enjoy every picture and agree with everything I say, but if I were out to screw you do you really think I would waste all of my time talking to you about it? How do you like me now? Still afraid to call and talk to the big bad evil Vlad? Have you made your decision yet cause the clock is ticking… the only thing that has changed is that you don’t have to blindly trust me anymore because the cards are on the table.

Indeed we do, as cliché as it may sound. Microsoft and Microsoft Partners have a problem. Few problems are among us as partners, some are between us together and our competitors and clients. But we have serious problems that have only been amplified by the WPC’s show of ignorance for the concerns SMB IT have voiced.

Microsoft WPC is supposed to energize the partner community, give it full faith in the products and services Microsoft will offer next, reinforce the Microsoft leadership in the industry and motivate us all to work together with Microsoft to benefit our clients. How did it go this year?

Microsoft failed this year by all accounts and with everyone I spoke to.

Lack of Vision: Software + Services. The catchphrase has been hammered into our brains permanently, in a largely meaningless way, and repeated every minute of every keynote. Yet it failed to clearly communicate exactly where Microsoft will lead, where Microsoft will empower its partners and where it will directly compete with us. The only clear inference is that Microsoft is starting to distance itself from the “applications on a local network with a server and some remote access” strategy it has become so dominant with.

Lack of Professionalism: Microsoft is no stranger to taunting competitors and challengers. Back when Microsoft was the dominant force in personal and business computing and a beloved technology leader the jabs came off as a spirited proclamation of victory. Last week they were soaked in desperation, paralyzing and often directionless. Kevin Turner took shots at every vendor that competed against every solution Microsoft builds, clearly failing to understand that as solution providers and developers in the real world we actually partner and work with the people he was calling out. Sorry Kevin, but Microsoft has not kept up with the marketplace demands, the illusion that Microsoft tools are the best in every scenario for every company only exists in your head, solving Microsoft shortcomings with Microsoft software is not something that is easily sold to even the most gullible of CIOs.

Lack of Partner Direction: By far the biggest disappointment of the show. All of Microsoft’s executives failed to clearly communicate the partnership benefits. That is why partners pack the keynotes, to find a way to partner up with Microsoft. If you want to gloat about how fabulous you are and talk about exciting commission schedules as a brand recommender and a sales agent you might want to go work for Mary Kay. This is the biggest quagmire for Microsoft – it’s competitors are more agile because they do not have to work with partners to go to market. Infrastructure solutions are easy enough to offer and both Google and Apple and Amazon are beating Microsoft to the market, with far simpler and less convoluted solutions. How can Microsoft compete with its partners in a solution ecosystem that doesn’t require partners to begin with?

Lack of Problem Recognition: Apple absolutely decimates the public image of Microsoft’s new system and Microsoft sits back. Microsoft is constantly challenged as a company without ability to come out with anything new that captivates the business and consumer marketplace – and they dust off the research lab professors and robots that wouldn’t even make it into cheesy 70’s vision of the future. Microsoft partners pay thousands of dollars to come to the WPC to hear how Microsoft intends to fix the Vista issues and are instead handed the blame for not pushing Vista hard enough and driving deployments.

Lack of Broad Excitement: Don’t underestimate how relevant broad excitement by the overall global IT community may be. Blogs. Newsgroups. Web TV. Even more mainstream technology sites largely ignored the significant news coming from the event. In a time where Microsoft is being attacked on all sides – devices, servers, workstation operating systems, entertainment – Microsoft’s competitors are capturing the imagination and excitement of the technology enthusiasts and evangelists leaving Microsoft in their ridiculed middle aged man self as depicted in Apple commercials which are less funny with each passing day and just pointing out the obvious. Microsoft is slowly turning into IBM. Quick, how much IBM software do you run today? Microsoft as a platform is not just a .exe anymore. With AIR, with the cloud application deployments that can be multiplatform from the start, with even iPhone, Microsoft had to excite and give a great reason for someone to develop for their platform and make it relevant. In faling to do so, Microsoft jeopardizes their future.

Of All The Epic Fails…

Microsoft’s competitors just can’t do anything to wrong the client. Google ships 12 Tb of logs to a private company and destroys any faith anyone could possibly have in them yet they continue to be the most well respected brand and an emerging solution for all your business, personal and social problems. Apple bricks thousands of phones, downs their cloud me solution for days, makes their customers stand in the line for hours while their systems crash, cripples their devices and clients not only take the abuse but live to rave about how great the ends justified the experience.

Meanwhile Microsoft cannot even get its most loyal partners to consider a move from a six year old platform. With the clients showing less and less willingness to pay for the essentials and the rising competence of Microsoft’s core competitors in Apple and Linux it is hard to find what Microsoft’s vision is. Yes, Software + Services as we heard the first 5,000 times but what does that actually mean? How does Microsoft compete with the ad sponsored software? How does Microsoft compete with totally free software?

You have to be a heck of a Microsoft fanboy to look past these obstacles and answer these questions.

I am one of those unapologetic Microsoft fanboys and even I am shaking my head at this.

Microsoft clearly no longer wants to work with partners on a broad scale. Sure on the low end they want to train “partners” to be their evangelists and SA resellers. On the high end, Microsoft wants the partners to fill in the gap in the solution portfolio until Microsoft can catch up to them and replace with their own solutions. You may even scrape by in the complex infrastructure migration space where a company magically wants to replace their current infrastructure mess with a new release of more of the same and face the same problem five years down the road. Little holes, little gaps, little opportunities.

Where are the partners?

That is the key question that remained vague and unanswered. Yeah, we got it, Software + Services!

Where am I as a Microsoft partner? In 2008, higher and higher. We’ll do more business with Microsoft this year than ever before, with two huge undertakings under way. Past that, I have to admit, I am less decisive of aligning my business with Microsoft because for the first time in my Microsoft partnership I doubt their direction and seriously question their ability to be successful across the board. I don’t see where OWN fits in Microsoft’s quest to fight against itself and cannibalize its own self interests and pricing premiums. I doubt and refuse to commit my development resources on a Microsoft network that has a goal of competing with free and AdSense, I sell the value of my solutions not their mass appeal to resell others. As Dare Obsanjo mentioned this weekend, giving sh*t away is not a business model.

Steve, Kevin, Allison… you need to go back to the drawing board.

You failed to draw up a clear picture for us to be a partner in your business plan.

You have put us in an uncomfortable position where we must reevaluate our business plan and you can count that we’re going to our own drawing board, with an eraser.

Microsoft, Houston.. we have a problem. We need to be involved. Decisions and announcements you’ve made this week will make the business in the short term very good, but they ignore the long term strategy problems that have us all uncertain and desperate for answers. Answers that you have failed to provide. Those concerns don’t go away, they just fume and seriously impact our relationship in the future, which in turn limits your ambitions for the future. You need to come up with something, fast. Where does Microsoft want to go today? I honestly can’t answer that question. Can you? Can Microsoft? Everywhere is not a direction, it’s lack thereof. Microsoft, the clock is ticking - fix this while we’re still listening.

P.S. I have told Microsoft a year ago that their model will not work. I have warned partners in many posts to start thinking cloud strategy in their own service model. I have changed my business model as a result of it, I have broadened OWN reach of Microsoft cloud to native deployments in EU and in Australia, I have offered 10x as much as Microsoft does, I have a long track record of being brutally honest even when it may not be the most popular thing to say, I have thousands of partners worldwide, a mature service-oriented organization. I really do not appreciate folks offending my friends or trying to volunteer me for advisory councils or more free work, I have no intention of helping Microsoft fix the mistake I’ve given them a years worth of heads-up on. If you want this to be fixed so badly to work for you, I have fixed it. It’s called Own Web Now Corp. Hit the partner link and grow your business. Or sit back and complain while Microsoft makes you extinct. I intend to invest the next year of my professional blogging towards helping SMB prepare and embrace the cloud and grow it as a part of the solution portfolio, not as a replacement for a 6% fib. As Alec Baldwin said in Glengarry Glen Ross: “Get mad you sons of bitches.” Microsoft, do likewise. We all want our clients to get the best service at the best possible price with the best possible company. I am making sure OWN is a part of that solution. I am begging Microsoft to come aboard. I am begging you to consider it too. The choice is yours, let’s go!

As much as I can’t agree with their message and direction, I have to extend the huge kudos to the Digital WPC team at Microsoft for making the keynotes and side sessions available to the partner audience at large. To be able to sit in my office as a Floridian in a tshirt and shorts and watch the news come out live instead of through someone else’s eyes and reports has been amazing. As a partner, thank you!

Now comes the grueling task of sitting down with my team and picking apart the notes, the powerpoints, crunching numbers, designing surveys and trying to figure out how we can continue to stay one step ahead of the rest, shed the stuff that keeps us from being flexible and move forward.

I always like to take the weekend after WPC off to clear my mind a little and let the keynote euphoria wash out a little. Microsoft is great at selling themselves and their opportunity and it takes a few days to put down the Koolade, evaluate where we’re at with respect to where we could be and what we can actually pull off in a meaningful way.

Regrets: I wish I was there. WPC is about so much more than the keynotes and sessions, it’s about learning what the business possibilities truly are and learning from people that are not exactly the same as you. My boy just had his first two nights of sleeping straight through the night so in the hindsight it probably wouldn’t have killed me (as in wife with a steak knife) if I had gone. I wish I didn’t screw Mark Crall by putting an explicit image right above his corporate logo, sorry about that man. I wish we lead into WPC with a bit more of an open mind towards Apple and Google and SalesForce as it seems that trend is getting far too strong for Microsoft to ignore so neither should we.

I think Kevin Turner said it best today:

“Always bet on what your customers are telling you.”

Same to you bud. Now back to work on trying to open that conversation up, even when it revolves around something I may not like to hear.

It’s always refreshing to see Microsoft be honest about where they are in this market:

We’ve embraced this disruption, we are really in a leadership position.

It’s big of them to admit that the Software + Services was not a vision or a direction for Microsoft, but rather a competitive response to the newfound dominance web apps have started to create and diminish the Microsoft’s monopoly power over the adoption of new consumer and business applications. It’s hard to stifle something that doesn’t run on your turf, so Microsoft built a business model on top of it and found a way to offer, market and commission it. As poorly executed and beta quality as it may be, this is a huge undertaking for Microsoft with almost unimaginable complexity..

… for the company that big to embrace it that quickly and move in such a different direction is nothing short of amazing. Congratulations to the Microsoft management on that one.

But then he fell back to the same ol’ Microsoft deception:

The leader in the commercial software + services space is Microsoft. We are not #1 in consumer software + services, we are strong third.

The strong third really made me laugh, I was expecting the “I’m a Mac” to jump out and join in on the dilusion of market dominance.

In case you’re wondering what “strong third” means take a look at the April search dominance Microsoft has - at 9.1% and declining!

What Kevin Turner knows, but is not discussing for obvious reasons, is that the consumer choices drive business direction. What you use at home tends to be what you want to use at work.

Why Vista?

“It is more secure today than Leopard, Linux, … and fewer patching means less cost” goes back to the message that Microsoft has been emploring it’s partners this week to do for Microsoft - please help us smash the myth that Vista is not great:

“We want to help find a way to help you evangelize and deploy Vista” begging for someone else to address it and not abandon it: “Any investment you make on Windows Vista will serve you well when the next Windows comes out” so please “Give the facts a megaphone and drive deployment!”

This makes me scratch my head a little and I just don’t get it.

Who does Kevin Turner think is his enemy here? People that don’t want Vista?

Last time I checked, customers have never heard of Vista - they only know Windows. People rejecting Vista? IT consultants, IT departments, CIOs and enterprise customers. The very stronghold of Microsoft’s evangelical choir, which is responsible for the actual deployments. Don’t look at partners, look at your advertising budget.

He even took a moment to take a shot at Oracle and imply they are in financial trouble.

Few unfounded swipes at Linux.. nothing new there.

He also took a swipe at Google: “You have to wonder about a company that has to remind itself of their slogal ‘do no evil’” and they have no partner ecosystem. Well, guess what, at 6% a month Kevin - neither does Microsoft. Not a complaint, OwnWebNow and my entire team thank you for that.

Finally, he went on to talk about how Microsoft (an expensive product by all accounts) can grow in a tough economy. For a COO he sure has to be aware of the term called “budget” and it being the key for why people are moving to cheaper or alternative solutions. To sum it up, here is what Microsoft wants from it’s partners:

Classy keynote all the way - but boy, what a giant, giant miss.

Watching the keynote with Allison Watson, very interesting. In a sharp contrast to yesterday’s direct pitch for Microsoft Online and handing your clients over for a 6% monthly commission, today the message is that Software + Service is actually a partner opportunity to use Microsoft technologies to power the Web 2.0-ish applications and designing them on top of the Microsoft platform.

Very, very silent on the “Just move your clients to our Data Center” pitch. They even brought up a few partners in the hosting space.

“You shouldn’t be a part of someone elses agenda, you should set the agenda.”

Things change overnight, don’t they?

About 10 minutes ago I became the biggest fan of the Microsoft Corporation that ever existed. Microsoft showcased the opportunity in Microsoft Online suite and presented their vision in such an awesome way that will make me and my company very, very rich. Quote: “The changes cause a lot of pain.” Here is roughly the vision they have for Microsoft Partners and their participation in the Microsoft Online Software + Services:

(…) see www.microsoftcoownership.com but be warned, not safe for work.

In case you’re wondering, you’re the girl

Specifics are: you as a Microsoft Partner will recommend Microsoft Online and sign the customer up for hosted Exchange, SharePoint, etc and let Microsoft bill, support and work with your client directly. In return, Microsoft will give you 12% commission of a $15/mo service ($1.80/user/month) the first year and then 6% commission ($0.90/user/month) the year after that!

Whoever thought of this fantastic way to screw the partners and make my business immediately relevant… Thank you!

One of the questions I am often asked by Microsoft partners is if I am afraid that Microsoft would try to kill me, in a joking way of course. Doesn’t the stuff here piss them off to no end?

In a nutshell, no.

Microsoft is an interesting organization to work for. They don’t really have intermediary points of contact, you’re either dealing with someone very high up that will forget the conversation as soon as it’s over or someone so low on the totem pole that the issue will never float up either high enough or to the person that can initiate it’s resolution. The people in the middle use blogs and public opinion to justify asking for resources and opening up internal conversation and action requests. If you’ve ever worked with a Microsoft product group you know they are very feedback oriented and whenever they need to make a call they look for the number of people that it will affect, how to best solve the problem, find a compromise, etc. Microsoft’s corporate and business divisions don’t have that “problem” they are just trying to make more money.

I know through working with a number of Microsoft people that they actually really enjoy the blog because it stimulates feedback and gets them the information that they otherwise wouldn’t get. You see, partners by nature would rather be quoted in the press with something good so they can get more leads or a PAM favor than try to push Microsoft in a direction that makes both of us more successful.

You should blog. No, Microsoft won’t kill you. There are good people there that are doing their best to make it better every day.

The Problem

Microsoft needs to be aware of the problems that are causing it’s partners to desert them. As good as things are right now, we are all looking at other options. Why?

The main problem with Microsoft is that it is not spending it’s time or talking about writing business software. Microsoft is in a panic mode trying to address the Google, Amazon, Apple issues while we, their business partners, are stuck with the same old garbage with the more attractive UI.

Most of us would be perfectly content if you could just focus on writing software.

But that’s not the kind of a company Microsoft is. We will compete. Against Apple. Against Sony. Against Google. Against Amazon. Against Adobe. Against the entire Open Source movement. Against the government. Against users themselves. What we can’t compete with we will buy. We will run around with our sword until we collapse on the floor in the pool of our enemies blood and feces.

Ladies and gentlemen, welcome to WPC, you’re standing in the blood and feces of the overzealous competitive Microsoft that is crumbling at its foundation while an all out assault is being launched by all the competitors Microsoft couldn’t work with and chose to fight.

If you do anything this week: Remind Microsoft why you are a partner, and ask them to focus on the areas where we are already making money together so we can work together in the future.

Or there is no future together with Microsoft.

Your move Steve.

Every now and then I get to see a giant mistake unfold right in front of me and this year it seems to be missing out on WPC. While there is no way I possibly could have made it, I felt a little less bad knowing that I could at least catch a glimpse of it through Digital WPC:

https://www.microsoft.com/digitalwpc/default.aspx

Eh, not quite. We’re working on something else for the folks that want a digest from WPC in terms of the news and impact on our business (announcement to follow). If anything, WPC is a look down the years of vision and direction of where Microsoft expects to make money not to mention terrific networking opportunities, even HTG is airing theirs.

Wish I could be there, bah..

P.S. It’s so sad when you can’t even take a potshot because you feel so bad about them, they want to provide services but can’t even keep the Partner web site together at 5AM.

Just when we thought Microsoft could not possibly lose any more direction as a business software publisher they find a way, in form of Equipt:

Initially code-named “Albany,” Microsoft Equipt offers consumers Microsoft Office Home and Student 2007, giving them the latest versions of Word, Excel, PowerPoint and OneNote for their personal and school projects; Windows Live OneCare, the all-in-one security and PC management service; Windows Live tools, such as Windows Live Mail, Windows Live Messenger and Windows Live Photo Gallery so they can connect and share with people they care about most; and Office Live Workspace, a new service from Microsoft that makes it easy to save documents to a dedicated online Workspace and share them with friends and classmates. Anytime a new version of Office or Windows Live OneCare is released, Microsoft Equipt customers will get the version upgrades as part of their subscriptions.

But is this just another distraction from the core Microsoft business, or is this a brilliant ploy to leapfrog the competition in the consumer space?

In short: Microsoft is trying to extend its desktop monopoly to include the Office and Service Subscription monopoly by bundling it’s Office Home, OneCare Antivirus and a bunch of freeware found on its web site. Why? The ploy to get OEMs to install a trial version of Office on brand new PCs backfired when customers realized they were tricked into using the new drug but didn’t quite want to pay for it! So they went back to the old releases.

This move does four great things for Microsoft:

1. It reassures the retail channel that it can continue to be relevant in the Cloud Services world because the package will be distributed in a retail setting leading to more store visits and ability to get some direct retailer IT services traction (Geek Squad, FireDog, etc)
2. It creates a proof of concept for Software-as-a-Service model for Microsoft, extending beyond the free ad sponsored software solutions that have by large been loss leaders for both Microsoft and Google.
3. It creates a track record of demand from the customers in the area where regulators are less likely to be skeptical of Microsoft’s actions. While this kind of a “bundle offer” would lead to immediate lawsuits if it included things like Exchange and SharePoint (which require other purchases and more complex licensing), not too many people seem to be focused on the consumer retail space where Microsoft can try out its “bundling” effect and later claim consumer demand, not anticompetitive greed, as the main driver.
4. It changes the licensing message from “Right to use” to “Install it on three PCs, we aren’t going to threaten you by calling you a pirate!”

All in all, good move Microsoft! I doubt anyone will notice what is really going on here.

Ever since 2003 TechEd we’ve been speculating on the time when Microsoft will be releasing a modern operating system to compete with the new lightweight offerings from the competition that are starting to pick up more steam. To see the details of the complaints and issues, check out this hit piece on Windows from NY Times, written with the anger you’ll only get on Vladville.

The situation is far simpler than both Microsoft and NY Times would have us believe though.

Microsoft is afraid of a complete system rewrite because every incremental step in evolution of Windows over the past few years has been met with severe resistance. First the 64bit move, which vendors were not ready for and did not have anything ready for. Then we had the security enhancements in both Vista and Windows Server. For Vista’s sake, it was just horribly implemented, everyone but maybe five people I know absolutely hate UAC to the extent that they have disabled it and shot the system back to the security level that even XP would cringe at. On the server side, Microsoft just doesn’t have the security reputation for people to trust it, and Forefront line of software is just never discussed as an option.

So, what is Microsoft to do? Sit back and roll out another dud?

Pretty much:

Last week, Bill Veghte, a Microsoft senior vice president, sent a letter to customers reassuring them there would be minimal changes to Windows’ essential code. “Our approach with Windows 7,” he wrote, “is to build off the same core architecture as Windows Vista so the investments you and our partners have made in Windows Vista will continue to pay off with Windows 7.”

This is why I am tuning into the Digital WPC to find out what they will say about the future of the platform that is crumbling. Microsoft, at least in PR terms, is taking the line of least resistance and trying to say that everything will be the same its always been (look how well that worked out for Vista after all, the sales are through the roof!) and it will be same ol’, same ol’ with just a few tweaks to sync up to the net.

I want to propose something else..

If the assumption is that the Microsoft monopoly on the Office and Desktop is strong enough to put another [explicit language string too long for the blog post] Vista version out, what about putting out a modern operating system out with the legacy compatibility running in a virtual machine?

It’s not going to happen, but after all, this is Microsoft, and it needs to do something big. If it intends to remain relevant that is.