Microsoft Channel Strategy Disappointing to Partners

Microsoft solution providers have expressed disappointment over the software giant's persistent unwillingness to allow them to sell the Surface tablet.

Ten large account resellers (LARs) are used to sell Microsoft's Surface, and according to the CEO of Denali Advanced Integration, Majdi "Mike" Daher, this has led to the "isolation and alienation" of partners that have made Microsoft successful. Daher's company is based in Redmond, Washington, and is 114 on the SP500, with $180 million in sales.

Daher said: "What I read into this is they are desperate; they are trying to gain market share by partnering with the big guys, but they have a lot of ground to make up. They don't understand that they need to start at the grassroots of the business. Microsoft doesn't understand that it is the value-added partners and regional partners like Denali that are driving the deals and generating demand. We are the ones helping the customers make the [tablet] buying decision."

Thirty-thousand tablet computers have been sold by Denali this year, through vendors like Apple and Samsung which have robust and mature tablet-based channel programs. Daher stated: "Microsoft needs to stop putting walls up and obstacles in our way and reasons on why we cannot sell the [Surface] product. Microsoft should be excited that channel partners are upset. We care! We want Microsoft to be successful. We have been partners with Microsoft for over 20 years. We care. That is why we are upset."

Daher uses the Windows 8 OS on his phone, tablet, computer and laptop, and he has a clear message to the Microsoft CEO Steve Ballmer: "Windows 8 is a fantastic product. Microsoft just needs to enable partners like us to take the great Windows 8 story to our corporate and commercial accounts and just let us sell. Allow us to sell the complete story. When we sell the full portfolio of Microsoft, whether it is infrastructure, Office 365, SharePoint, Windows, it is a great story that we can take to our customers comfortably. They don't have to change applications or build new code for an OS they are not used to. It is Windows. It is very easy to sell if we are allowed to sell it."

The COO at PCPC Direct, Joe Vaught, questions the reason for LARs being given the go-ahead to distribute the Surface product, when partners who are selling Microsoft business technology solutions are not able to.

Vaught said: "Inquiring minds want to know. Is this the first sign of encroachment? Encroaching is so easy. You take one step, and if no one says anything, you take more steps. You have to nip it in the bud if you can. It jolted me when I read that Microsoft is selling Surface through LARs and not giving it to systems integrators."

Authorized LARs CDW, CompuCom Systems, En Pointe Technologies, Insight Enterprises, PC Connection, PCM, Softchoice, Softmart, SHI International and Zones have been selected by Microsoft to cover the sales of the Surface tablet under the new Microsoft Devices Program. A number of partners expressed surprise at the move to present the product to LARS, stating that their expectation had been that the Surface would have been made generally available. Microsoft commented that additional partners will be authorized in future, but this is not good enough for partners.

Vaught's PCPC Direct is based in Houston, Texas, and distributes Microsoft's high-performance clustering software. He said that his partners want to make themselves more visible to let Microsoft know where "they stand." Vaught noted: "That's the only way Microsoft will know what not to do. I don't know what the hell is wrong with them. It is almost like they have some kind of bean counter marking the [channel] decisions."

The distribution strategy for the Microsoft Surface could be due to keeping the cost of sales low. Vaught speculated: "It is a larger-order, fewer-transactions channel strategy. If they gave it to everyone, there would be lots of partners placing orders. They are limiting it to a smaller set of big partners. That is my guess."

Other key partners have stated that Microsoft's distribution policy is "a bad decision" and the company has misjudged the traction partners are getting with Apple and Samsung products. Microsoft has also been faulted for its myopic channel view. One CEO for a large Microsoft enterprise partner said: "Microsoft has obviously decided that the benefit of having a focused and limited channel of LARs is better than having a value-added solution provider channel. They don't have a full appreciation of the capabilities and power of the value added channel." He added that Microsoft needs a better channel strategy because they are only going to have limited success with the channel model.

The CEO of Microsoft partner Future Tech, Bob Venero, said: "Instead of leveraging the channel that helped make it successful, Microsoft decided to initially sell Surface direct itself, which didn't go well. Now they are going a different route to LARs, which again ignores the power of its more than 100,000 VARs in this country. Why not leverage those partners to sell Surface? It doesn't make business sense." (CY) Link