shaping anew - pdf.1105media.compdf.1105media.com/rcp/2009/70019518/rcp_905dg.pdf · 29 putting the...
TRANSCRIPT
Tech·Ed Preview ✱ 24
RCPmag.com ✱ May 2009
How the recession is forcing partners toreinvent themselves and is changing thestructure of the Microsoft ecosystem.
SHAPINGA NEWIDENTITY
Special Pullout Section: Q&A with Microsoft OEM Chief Steve Guggenheimer
The Trouble with Microsoft’sDynamics Strategy
Get Ready for Private-Label Hosted Exchange
DeGroot on New Realities in Midmarket Licensing
Plus
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RCPmag.com MAY 2009 Redmond Channel Partner 3
14 Shaping a New IdentityHow the recession is forcing partners to reinvent themselves and is changing the structure of the Microsoft channel.
24 Building out the EcosystemISVs provide the critical tools and applications that complete Microsoft solutions. Microsoft Tech·Ed is traditionally where many of those vendors announce their next products. Find out what third parties have coming at Tech·Ed North America 2009.
29 Putting the Right Brand on Hosted MessagingWith a new Ready to Go Campaign, Microsoft aims to help hosters and VARs sell full-featured e-mail services to small businesses. It’s an appealing opportunity, but trust remains an issue.
DEPARTMENTS
FEATURES
COVER ILLUSTRATION BY NIGEL HOLMES
Contents M A Y 2 0 0 9 ✱ V O L U M E 4 ✱ N U M B E R 5
I N E V E R Y I S S U E
nsi e7 Channel Report WPC 2009: Microsoft Worldwide Partner Conference Made New . . . . . . . . . . . . . . . . . . . . . . . . 7
CHANNEL NEWS: Novell Reaches out to Channel . . . . 9VIRTUALIZATION: Lab Experiment—Hypervisors . . . 10
POSTSCRIPT: BearingPoint Breaking Up . . . . . . . . . . 12
32 Resource CenterHARDWARE: Dell Makes Two High-End Laptop Plays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
HOSTING: Apptix Looks to Channel for Growth . . . . 34
SMALL BUSINESS: Microsoft Redefines ‘Entry Level’for Windows Server . . . . . . . . . . . . . . . . . . . . . . . . . . 34
COLUMNS
DYNAMICS: Joshua GreenbaumMicrosoft’s Vertical Innovation Strategy . . . . . . . . . 38
DIRECTIONS: Paul DeGrootBig Cheese in Small Markets . . . . . . . . . . . . . . . . . . . 40
4 RCPmag.com 6 Channel Watch 39 RCP Index
14
SPECIAL PULLOUT SECTION
Partner’s Guide to System BuildingA Q&A with Microsoft OEM Chief Steve Guggenheimeron the state of the system-builder channel, opportunitieswith Microsoft, Windows 7 readiness, the economy and more.
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4 Redmond Channel Partner MAY 2009 RCPmag.com
Coming soon: MSP marketplace; infrastructure optimization On ine
10
What’s
EDITORIAL STAFF
Vice President, Editorial Director Doug Barney
Editor in Chief Scott Bekker
Managing Editor Wendy Gonchar
Associate Managing Editor Katrina Carrasco
ART STAFF
Creative Director Scott Shultz
Senior Graphic Designer Alan Tao
ONLINE/DIGITAL MEDIA
Editor, RCPmag.com &Executive Editor, New Media Michael Domingo
Executive Editor, Web Initiatives Becky Nagel
Online News Editor Kurt Mackie
Editor, RCP Update Lee Pender
Associate Editor, Web Gladys Rama
Director, Web Development Rita Zurcher
Web Producer Shane Lee
Web Developer Rohan Christian
President Henry Allain
Vice President, Publishing Matt N. Morollo
Director, Marketing Michele Imgrund
Online Marketing Director Tracy S. Cook
President & Chief Executive Officer Neal Vitale
Senior Vice President &Chief Financial Officer Richard Vitale
Executive Vice President Michael J. Valenti
Vice President, Finance & Administration Christopher M. Coates
Vice President, Digital Media, Audience Marketing &
Web Operations Abraham M. Langer
Vice President, Information Technology Erik A. Lindgren
Vice President, Attendee Marketing Carmel McDonagh
Director, Print Production Jenny Hernandez
Chairman of the Board Jeffrey S. Klein
RCPmag.comMay 2009 + Volume 4 + Number 5
RedmondChannelPartner
Redmond Channel PartnerThe opinions expressed within the articles and other contents
herein do not necessarily express those of the publisher.
@ RCPmag.com
RCPUStay tuned to channelnews with the Redmond Channel Partner Update e-mail newsletter.
BLOGS
FINDIT CODESYou’ll see FindIT codes embedded throughout Redmond Channel Partner. Simply typethese into the FindIT code box on any RCPmag.com page and you’ll jump directly tothe desired information. (Note that all FindIT codes are one word, and they are notcase-sensitive.)
TECH LIBRARY
On the IBM-Sun Buyout BreakdownBut IBM’s health was never really in question. Sun is thecompany that has had some troubling financial newsin recent years. And, oddly enough, Sun is apparentlythe party that walked away from the deal, with ex-CEOand current chairman, the supposedly retired ScottMcNealy (he lives!), opposed to selling the companyhe co-founded.FindIT code: IBMSun
On Windows 7 Replacing the Eternal Windows XP OK, we love XP. Everybody does. It’s familiar and use-ful, and it still does most of what most of us need anOS to do. But at some point, isn’t it going to enter aWillie Mays-with-the-Mets stage of its career? Whendoes XP become antiquated? Our feeling is prettysoon—when Windows 7, or maybe the first Windows 7service pack, comes along and sends the legend intoretirement.FindIT code: EternalOS
Access this special section andother great resources fromRCPmag.com. FindIT code:TechLibrary
In this month’sspecial pulloutsection,“Partners Guideto SystemBuilding,” Editorin Chief Scott
Bekker sits down with SteveGuggenheimer, corporate vicepresident of Microsoft’s OEMDivision, to discuss the state ofthe system-builder channel.
Read what Guggenheimer (or “Guggs” as he prefers to be called) had to say about partners’ opportunities with Microsoft, Windows 7 readiness, the economy andmore.
Also be sure to check out special pullout sections fromprevious issues, including: ✱ Partners Guide to SQL Server 2008✱ ISVs Guide to ApplicationCertification✱ Partners Guide toInfrastructure Optimization✱ Partners Guide to DesktopVirtualization
CALLING ALL PARTNERS Reaching the Staff
Staff may be reached via e-mail, telephone, fax, or mail. A list of editors and contact information is also available online at
VirtualizationReview.com.
E-mail: To e-mail any member of the staff, please use the following form: [email protected]
Framingham Office (weekdays, 9:00 a.m. – 5:00 p.m. ET)Telephone 508-875-6644; Fax 508-875-6633
600 Worcester Road, Suite 204, Framingham, MA 01702
Irvine Office (weekdays, 9:00 a.m. – 5:00 p.m. PT)Telephone 949-265-1520; Fax 949-265-1528
16261 Laguna Canyon Road, Suite 130, Irvine, CA 92618
Corporate Office (weekdays, 8:30 a.m. – 5:30 p.m. PT)Telephone 818-734-1520; Fax 818-734-1528
9121 Oakdale Avenue, Suite 101, Chatsworth, CA 91311
Partner Spotlight ReturnsIn the coming months, look for the Partner Spotlight making a comeback in a casual Q&A-style format in the pages of RCP. We want to know how your company achieved its current status and what you’d tell Allison Watson if you had her ear. How does yourorganization rate the MSPP as compared to other partner programs? These are just asample of the questions we want to ask. And we want to hear from all of you, no matterwhat partner level. We’ll post your answers in their entirety online and pull out the best ones for print. If you’d like to participate, e-mail Managing Editor Wendy Gonchar at [email protected]. Please put “Partner Spotlight” in the subject line. FindIT code: YourTurn
0509rcp_WTOC_4.v3 4/14/09 2:48 PM Page 4
Diskeeper available at:
Why “real-time” defrag? What’swrong with periodic schedules?
Fragmentation accumulates quickly.The faster and busier the system,the quicker the accumulation and the more the machine slows down.Defragmentation restores performanceand extends the life of the computer,
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Why would a real-time defrag approach be beneficial to a VAR?
The problems that are created byfragmentation are generally blamed onthe VAR who set the machine up, not themachine itself. So you want to handlefragmentation as it happens, not whenit becomes a problem—since the user isunaware of the fragmentation as the realculprit. Also, every time you respond to a service call to handle one of theseproblems, you lose money. It makes moresense to just get rid of the problem at theget-go. Real-time defragging eliminatesthose calls. It also pays off when it comesto repeat business, which is based oncustomers’ confidence in your ability tokeep their systems performing optimally.If you do nothing else, download a copyof Diskeeper and load it up on one ofyour most problematic customer sites.Then write to me at [email protected] tell me what happens.
Catching the Slow Server Culprit
If you do nothing else, download a copy of Diskeeper and load it up on one of your most problematic customer sites. Then write to me
at [email protected] and tell me what happens.
Diskeeper® 2009:Maximizing Performanceand Reliability—Automatically®
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technology is real relief from tightening IT budgets, backlogged system supportissues and expensive hardware upgrades. It’s designed to maintain the high performance levels demanded of today’s networked systems while lowering overall operating costs. Fragmentation accumulates fast, corrupting system performance hourly. Left alone, it causes slowdowns, freezes, crashes and frequent hardware upgrades. Diskeeper 2009 is the only defragmenterwith InvisiTasking technology, abreakthrough development that allows schedule-free defragmentation with zero overhead–extending hardwarelife expectancy up to 3 years. Becausenetworked systems are the core of yourbusiness, Diskeeper 2009 is a must have.
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Technology Executives Go On The Record
Anthony Crea,Channel Manager,Diskeeper Corporation
www.ingrammicro.comElectronic Software Download at www.diskeeper.com/channel
For evaluation copies of Diskeeper visit www.diskeeper.com/channel
Project2 2/10/09 9:30 AM Page 1
6 Redmond Channel Partner MAY 2009 RCPmag.com
The resulting survey, called the “2009 Microsoft SMBInsight Report” and published in late March, turned uptwo interesting pieces of data.
One was that partners are shifting more heavilytoward pushing virtualization solutions than they have
in the past. One question asked: “Which of the following do you see asthe best cost-saving technology?” Virtualization and the related optionof IT consolidation tied for first out of more than a dozen options with25 percent each. Software as a Service (SaaS) was the next closestselection, with 10 percent of respondents saying that it was the bestcost-saving option.
A similar question with the same answer options read: “What do yousee as the best technical investment for business growth given the cur-rent economic situation?” Virtualization came in first at 21 percent andIT consolidation was a close second at 20 percent. The next closestanswer was Customer Relationship Management at 13 percent.
Ross Brown, vice president of solution and ISV partners in theMicrosoft Worldwide Partner Group, finds the virtualization answerstriking. “For a while, virtualization has really been an upper midmarketand enterprise play,” Brown says. “SMB-focused partners are latchingonto virtualization as a technology for saving their customers money.”
If you’re persuaded by Microsoft’s findings on the resonance of virtu-alization with your peers and you want to start selling the technology,tread carefully with the word “virtualization” itself. It’s not a magic key-word that unlocks sales among the generally non-tech savvy SMB cus-tomer base, cautions Dave Sobel, CEO of Evolve Technologies, a GoldCertified Partner in Fairfax, Va., and a major proponent of selling virtu-alization to small businesses.
“We don’t run around saying virtualize your servers,” Sobel says. “Ourmessaging has always been around cost savings. We’ll say, ‘We’re good atconsolidating your servers to save you money.’ We’ve actually been
doing two virtualization projects in April,where the word virtualization was usedmaybe once, or maybe twice.”
The other interesting data point in thenew survey is that while Small BusinessSpecialists report very little traction todate on SaaS among their base of smallbusiness customers, they’re expectingusage of SaaS/hosted applications amongthat customer segment to grow quickly bythe end of 2009.
The way this question is structured inMicrosoft’s survey, it’s possible to read waytoo much into the results. How many busi-nesses can really answer accurately in thecontext of a survey whether the percent-age of their clients using SaaS/hostedapplications is 1 percent to 5 percent, 6percent to 10 percent, 11 percent to 15 per-cent and so on? Nonetheless, adding upaverages for all the categories reveals thatroughly 10 percent of respondents’ cus-tomers were using SaaS or hosted applica-tions at the time of the survey. Doing thesame for the percentage expected to beusing SaaS/hosted applications at the endof 2009, it’s in the ballpark of 17 percent.
Overall, the data in the survey indicatesthat Small Business Specialists are seeingopportunity right now in virtualization, ITconsolidation, SaaS and CustomerRelationship Management.•
Small BusinessSpecialists FindHopeful Signs
ChannelWatch
icrosoft used a slice of its resources recently to survey more than 600 Small Business Specialists worldwide to see where partners were
finding glimmers of light at the end of this dark economic tunnel.
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BY SCOTT BEKKER
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T R E N D S + I S S U E S + A N A LY S I S
ChannelReport{ WPC 2009 }
conference day with special optional ses-sions. “For partners, a normal workweekstarts Monday at 9 a.m.,” Salzer says. WPCwill be the same, beginning Monday morn-ing, July 13, with what she says will benews-making keynotes from MicrosoftCEO Steve Ballmer, COO Kevin Turner andWPG Corporate Vice President AllisonWatson. Much of that pre-day content isbeing pushed to Sunday, July 12.
Microsoft is also bringing in more cor-porate vice presidents throughout the con-ference for what it calls “value keynotes”—high-level but segment-specific messagesfrom executives like Simon Witts, corporatevice president of the Enterprise and PartnerGroup, and Steve Guggenheimer, corporatevice president of the OEM Division. “We’vebeen piloting those the last few years. We’regoing from something like six valuekeynotes last year to in the 20s this year,”Salzer explains. Throughout the 200 or soregular breakout sessions, the company isencouraging speakers to focus less on thePowerPoint decks and more on interactionwith attendees, while leaving more time forquestions and answers. There are newtracks, including one for systems integra-tors and one for the new category of Webmarketeers or Web agencies.
Historically, the expo area has beenMicrosoft-centric, with a few largeMicrosoft areas and everyone else scatteredthroughout the hall. This year, Microsoftwill group ISVs near relevant MicrosoftBusiness Groups.
“The Information Worker [IW] boothfor Office and SharePoint might be an
Microsoft opened registration for the Worldwide PartnerConference (WPC) four weeks early this year, and is moving tomake the show relevant to partners who are struggling in adown economy to keep their heads above water and who need
100 percent ROI to justify the trip.“The adage ‘time is money’ is one of the big areas where we’re focused.
We know, obviously, for partners that means a lot. But this year for WPCwe’re taking it to the nth degree,” says Pam Salzer, the Microsoft WorldwidePartner Group (WPG) executive responsible for the annual conference.
Registration began March 19 for the conference, which takes place thisyear in New Orleans July 13-19. “We opened it four weeks early to help part-ners build business cases to attend,” Salzer explains.
Salzer and the WPG team are reshuffling the show in several ways tomake it address partners’ needs tomaximize their time and comeaway with information and toolsthat they can turn into new busi-ness right away.
Gone, for one thing, is theloosely structured workweek, pre-
“We opened [registration] fourweeks early to help partnersbuild business cases to attend.” Pam Salzer, Senior Director, Worldwide Partner Group, Microsoft
Microsoft Worldwide Partner Conference Made New
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Redmond tweaks flagship partner show for a down economy. By Scott Bekker
0509rcp_CR-7-12.v3 4/14/09 2:58 PM Page 7
Redmond Channel Partner directly serves the Microsoftchannel and includes editorial content that is 100 percentfocused on the strategic needs of this valuable group.
Become an Active Subscriber today and start receiving theindispensable information you need to deal with competitiveissues, address common customer objections, and profitablyposition Microsoft technologies.
Apply for your FREE subscription, in print or digital format,by visiting: http://rcpmag.com/subscribe
DRIVING SUCCESSIN THE MICROSOFTPARTNER COMMUNITY
Project7 8/13/08 2:43 PM Page 1
SPECIAL PULLOUT SECTION
RedmondChannelPartner
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One of the key jobs inside Microsoft, in relation to both the company’s overallfortunes and its partners, is the leader of the OEM division. The person in that position is responsible for the relationships that drive about $20 billion ofMicrosoft’s annual revenues. Behind those revenues are more than 200,000 part-ners— from the biggest multinational OEMs like Dell Inc. and Hewlett-Packard Co.that sell millions of systems per year, to small shops worldwide that might build asfew as a couple of systems.Departing from recent practice, Microsoft a year ago
tapped an internal veteran with broad experience throughout the company by naming Steve Guggenheimerto the post. Guggenheimer, who likes to be called “Guggs” (pronounced Googs), has made a number ofchanges in his year in the position of corporate vice president for the OEM Division.
Redmond Channel Partner Editor in Chief Scott Bekker spoke with Guggs in March on his first anniversary on the job in a conversation about the state of Microsoft’s OEM and system-builder channels, his priorities, Windows 7 and the economy.
A Q&A with MicrosoftOEM Chief SteveGuggenheimer on the state of the system-builder channel,opportunities withMicrosoft, Windows 7readiness, the economy and more.
PARTNERS’ GUIDE to System
Building
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The Breadth OEM ChannelIn aggregate, Breadth OEM business represents the third largest revenue stream for Microsoft worldwide OEM business. This audience comprises Named OEMs, Resellers, Distributors and System Builders, with a geographical presence in thirteen discrete regions across the globe that represents approximately 65 countries. By its very nature, this is an exciting partner segment; it includes a rich and diverse set of business models and go-to-market strategies, along with a set of engagement and resource requirements unique to the customer segments it serves. Broad Channel marketing has always been a focus of the OEM division, but we have really worked hard this last year to stabilize and improve our partners’ experiences through:
• Analysis:Understanding our partners through consistent segmentation in all markets
• Listening:Gaining insight by understanding various partner profiles, business models, and Breadth Marketing trends
• Benchmarking:Leveraging key performance indicators (KPIs) and other data points, acquired from tracking this segment through an annual industry survey conducted every year for the last 10 years
The OEM Partner CenterWhile many of our “Top Tier” Breadth OEMs engage with Microsoft through a direct relationship with a sales representative, the majority of partners have limited or no direct contact with Microsoft account teams. To succeed, these partners need robust, reliable, virtual tools and support resources. Microsoft strives to give our OEM partners fast, consistent access to tools and resources that help them develop and sell solutions— and provide strong support—to their customers. Our primary delivery format is through the online OEM Partner Center (OPC). The OPC offers a centralized location where Breadth OEMs can learn about products and available programs and download Service Pack updates. Just as important, the OPC can help partners train to build solutions and understand the Microsoft software licensing model. Overall, 52% of Microsoft partners have an OEM-specific component to their business, and these partners regularly take advantage of the OPC.
OPC URL:www.microsoft.com/oem/default.mspx
SB Discussion Groups:www.microsoft.com/communities/newsgroups/en-us
Marketing ExcellenceAt the beginning of every fiscal year, the Worldwide OEM Marketing organization creates a detailed roadmap of programs, offers, initiatives and marketing assets that describe our “To, With and Through” partner priorities and strategies, based on the broader company objectives set by our Senior Leadership Team. On a quarterly basis, Microsoft marketing and sales personnel collaborate with their counterparts across the globe to frame, craft, and deliver product-specific marketing assets to our OEM partners that they, in turn, leverage with their customers. These marketing assets can be easily customized for our Breadth partners and are created primarily to help our partners accelerate impact and time-to-revenue with customers. An excellent example of this would be our Windows® Small Business Server 2008 and Windows Essential Server Solutions launch, which enjoyed very high customer satisfaction ratings from our partners. While all of our Breadth OEM partner segments expressed satisfaction with the launch, System Builders in particular were very pleased, which they voiced through a poll that was administered through the OEM Partner Center portal.
Felicia GuityGeneral Manager
Worldwide Local OEMMicrosoft Corporation
DRIVING MARKETINGEXCELLENCE FOR OUR OEM PARTNERS THROUGH CLOSECORPORATE AND FIELDALIGNMENT AND “BEST OFBREED” RESOURCES
Project2 3/30/09 12:42 PM Page 1
Why Extending the Sale Beyond Windows Is Strategic for Our Breadth OEM Partners and MicrosoftOur partners face significant challenges in the current economy. At Microsoft, our goal is to turn those challenges into new opportunities. A primary business goal for OEM Breadth Marketing is to help partners save money, make money, and differentiate themselves with high-quality pre-installation programs such as Genuine Windows. New PCs with Genuine Windows software equip partners to deliver a superior customer “out-of-box” experience. In addition, Channel partners can capture incremental profit and revenue from small businesses and consumers. A PC with Genuine Windows software fuels discussion for add-on solutions, including the Microsoft Office system, anti-virus solutions, Windows Live Services, peripherals, photo printers, webcams and headsets. Finally, recent research indicates that a new PC with Genuine Windows reduces support costs and product returns—and provides a foundation for customer satisfaction and loyalty.
The success of our partners in this key area represents an opportunity to drive incremental software and hardware revenues. It also helps them “up-sell” a solution and vastly improves an end user’s “out-of-the-box” experience. Together, Microsoft and its valued OEM partners can influence a customer, small business, or an enterprise’s initial and future experiences. By doing so, we can elevate our combined value proposition in a way that is unique and difficult for our shared competitors to match.
This document is for informational purposes only.MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, AS TO THE INFORMATION IN THIS DOCUMENT.
© 2008 Microsoft Corporation. All rights reserved. Microsoft, the Microsoft logo, and Windows are trademarks of the Microsoft group of companies.
Worldwide Marketing Initiatives to Increase Distribution of Genuine Windows Pre-installed on New PCs
INITIATIVE OBJECTIVE OEM PARTNER/CUSTOMER BENEFIT
Genuine Windows Drive active preference for Genuine Windows vs. non-genuine in small business space
Improve “out-of-box” experience, minimize customer churn
Desktop Licensing Create awareness to prevent/minimize mis-licensing confusion
Drive clarity, consistency, and predictability for customers
Windows @ Telco Simplify the process for customers and salespeople in the Telco retail channel to buy and sell a PC
Fuel solutions differentiation: Only Windows can offer as rich an end-to-end solution
XP End-of-Sales Communicate the risks of counterfeit software and the benefits of selling only Genuine Windows
Increase sales and revenue recognition
The Right PC Drive sales to first-time PC buyers, and increase the total sale with appropriate hardware up-sells
Establish a foundation for incremental sales
Project2 3/30/09 12:43 PM Page 1
You’ve been around Microsoft for a long time. What are
some of the roles you’ve had at Microsoft that have
helped you in this new role?
GUGGS: I’ve had an interesting career. I worked inthe Windows group. I worked on Windows forWorkgroups and Windows 95. I actually worked onInternet Explorer 1, 2, 3 and 4 …
Right before this, I was in the Server and ToolsBusiness, running SQL Server and BizTalk anddeveloper tools. I’ve spent time working in the seg-ments: two-and-a-half years for SMS&P, [where] Iwas actually responsible for small business,
working with Allison [Watson, corporate vice presi-dent of the Worldwide Partner Group]. The SmallBusiness Specialist Community was one of the pro-grams we kicked off when I worked over there. Ispent a year in the United Kingdom. So I’ve been inthe field, in segments. I also spent some time on theconsumer side [MSN, WebTV, Xbox].
When this particular role came up, I think one ofthe things [senior management] thought about was,the world is changing. How do we help OEMs connectwith the broader Microsoft because it’s changed?Having worked [in the product groups, havingworked] in the segments, and having worked inSMS&P, having lived in the U.K. while working in ourfield—I think that was a helpful background.
I think the ability to have a good connectionwith the product groups—including Windows,where I spent time—and the ability to connect backand forth there, was important. Then I worked in a
S Y S T E M B U I L D E R S
Question: On the Windows 7 rollout, is anything being done differently than with the Vista rollout? Guggenheimer: “I would sayeverything. How’s that?”
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lot of areas that have gone through change. [OEMdoes] need to make some changes in terms of howwe operate within Microsoft.
The background that I have is pretty diverse,and it’s very helpful in this role because with OEM,there are so many things we need to do that cut acrossthe company. Being a bridge builder is important.
As I’ve been in this role, I think my backgroundhas actually turned out to be very useful. I didn’t havethat insight coming in. Having been here for a yearnow, I’m like, OK, I sort of see why they asked me todo it. I can definitely see where I can help. If you lookat some of the predecessors who were in this role,they didn’t have some of those same experiences. Ithink now is the right time for somebody who has gotthat broad background.
What was the biggest challenge you
identified when you took the job?
Our No. 1 challenge is to reconnect OEM to therest of the company. Within Microsoft, if you want tohave broad success and support, you really need all ofthe pieces lined up to help you. We need to have a greatconnection with the business groups so we’re notcatching whatever products they’re building, butinfluencing the products early on. We need to haveconversations with SMS&P and Allison Watson’s teamto make sure—from a partner perspective, whetherthey’re selling an open license or they’re purchasingWindows client—that they’re having a uniform expe-rience with us. We need to make sure for our partnersthat are working with Embedded, or Mobile, or otherthings besides Windows client, that we’re helpingthem get that information. So, job one was to makesure that we’re making it as easy as possible for ourpartners to get the benefit of all of Microsoft, and notjust the part that we’re closest to in OEM.
Another priority?
The second thing was connecting with our partnerbase. By default, we work with the very, very largepartners, the large multinationals, HP and Dell,Toshiba, Lenovo and Acer, etc., down to people whobuild one or two systems a year. Literally, you go fromtens of people who build hundreds of thousands oreven millions of machines to hundreds of thousands ofpeople who build a couple of machines. This organiza-tion, the group that supports the system-builder andbreadth side of the business, used to sit in SMS&Pwhen I sat there. It moved into the OEM organizationabout three years ago. I think when it transferred back
over [here], we didn’t do as good a job as we couldabout connecting with that broader set of partners.
Our second goal was to make sure we were put-ting enough emphasis on breadth and depth, makingsure we had good balance there. Challenge No. 2 washelping make sure the breadth side of our operations[is] as strong as possible. Adding some programs inthere, making sure we had enough people focused onit, going out myself and visiting, doing as many round-tables as possible with everything from the small to themedium to what we call named accounts—which are,based on volume, larger accounts—all the way up toour large multinationals. So I think job No. 2 or chal-lenge No. 2 is getting the right balance among breadthand depth and making sure the pendulum’s not swungtoo far one way or another.
Any other big priorities?
Because client ends up being a large part of whatwe focus on, you can almost feel too heavy [onclient]. There’s a lot of innovation going on inMicrosoft, whether it be Mobile, whether it beEmbedded, whether it be in Small Business Server orHome Server, whether it be Office. How do we helpour partners get the most from all the offerings thatare there? The world’s changing. The margin on thedesktop alone is not what it used to be, so there are alot of places where our partners are looking to inno-vate. That can be services, or what we did with Live orSearch, or through Office, or support, or additionalsoftware. Helping our partners get the most from thefull complement of the R&D that we do as a companyis an important area, and it’s something that I don’tthink we were doing as well as we could.
What would be helpful for partners to know about your
organization and what people do in your group?
One thing partners should know is we are theirchampions, to the extent that they help us under-stand their needs and what’s working for them andwhat’s not working for them or where they could usehelp. We’re ultimately the voice back into the businessgroups. We provided a lot of feedback during the
“The margin on the desktop alone is not what it used to be, so there are a lot of places where our partners are looking to innovate.”
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Windows 7 process on everything from different fea-tures to what’s harder for our partners to work withand what’s easier. We provide a lot of input, even onfeature sets. What things are important to them interms of differentiation, because our partners want tobe able to differentiate. They want to be able to mone-tize. Knowing that we’re their voice, I think, is useful.We can’t do everything they ask us, but if you don’t askand you don’t provide feedback or if you don’t knowwhere to provide feedback, I think that’s hard. Soknowing that whoever they work with, whether it’s alocal partner account manager or they go to theWorldwide Partner Conference or they come to one ofthe OEM tracks or they go to a seminar in a country,that team is the right team to have the conversationwith—that will help.
I think the second thing to know is that we’re not ahuge organization so we can’t talk to everyone one at atime. We try to do things through the Web and through
seminars and through events. To the extent that thosethings are working for them, great—tell us what works.To the extent they’re not, tell us how to improve them.
Windows 7 is right around the corner. There were some
bumps with the Windows Vista process as far as the
rollout and getting information to OEMs and smaller
partners. Is anything being done differently this time
that you can talk about?
I would say everything. How’s that? I’ve just got-ten back from a week on the road, in this case talkingwith our largest partners. We’ve worked very closelywith our partners as we go through this process tomake sure as we get to launch that it’s a jointlaunch—Microsoft and our partners are jointlyinvested in, working on and understand what suc-cess looks like and how we get there. So on the engi-neering side, we’ve been much cleaner on linkingmilestone to milestone, instead of picking a date wayout in the distance. When you pick a milestone wayout in the distance, one of two things happens: eitheryou change the feature set or you move the date.
I think Steven Sinofsky and his team have donea great job of keeping our partners involved from the
very beginning. We’ve been working with some ofour partners for as far back as two years now, andwe’ve been working very closely on the process we’lluse, having them involved. We got their feedbackearly on in terms of things they were interested in. Sothat’s a piece of it.
But even our smaller partners—we got the betaout as broadly as we could this time, so all of ourbreadth partners had the opportunity to work withit. We’ll start making more information available,more training, more readiness, as we get closer. Ithink from top to bottom one of the core differencesfor this release is that it’s as much our partners’release as it is ours. It won’t be a successful releaseunless our partners are as vested in it as we are, andwe understand that. We’re looking forward to that.As we get closer, as you talk to our partners, hopeful-ly they’re seeing a difference in their connection withus, and their access to information.
You’ve got a unique view of the system-building
community. What are the changes you’re seeing?
The channel’s been evolving for a while. Thereare people who still build systems. There are peoplewho build and buy. And there are people who used tobuild who now buy. There’s more choice todaybetween being someone who just builds something,someone who builds something and then buys othermachines to complement [it], and then peoplewho’ve turned into resellers as opposed to systembuilders. That particular change continues to evolve.You see partners move from one end to the other, yousee new partners come into play, etc.
A trend toward deeper differentiation has got-ten stronger. Just building PCs isn’t enough any-more. You can buy PCs at a reasonably low cost froma lot of people. Having some form of differentia-tion—whether it’s how well you support your cus-tomers; whether it’s geographically having a greatbusiness in a local area, having great relationships,maybe you build systems for the local school systemor the local government or the local [postal system],etc.—there’s that kind of approach. But having someform of differentiation has become more important.Just being able to build a PC or a server is not in itselfenough differentiation. It used to be. It used to be youcouldn’t get a computer; somebody could build one;off you would go. That alone, I don’t think is as usefulas it used to be. It’s … useful, but it’s not the thing thatdrives the business as much as it used to.
And then, what is it that differentiates you?That continues to evolve. So now, the conversationswe have are, what’s the next area to focus on? Should
“Microsoft is like this really big engine. Ifyou can pull all the levers and knobs in theright direction, you can get the whole company behind you, and you can reallymove forward.”
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I do services? Should I try and have a verticalapproach? Should I build custom machines that areunique for a specific industry? Should I go into busi-ness applications? Should I put in Small BusinessServers and remotely monitor those, and have servic-es be my stream for additional revenue? Those arethe kind of conversations that come next, and are theinteresting part of the dialogue today.
What effect is the economy having on the market,
and how are system builders faring?
It’s a tale of three cities. The multinationals, theHPs, Dells, etc., they look at a market like this andthey say, “OK, based on how we can do currencyhedging, we’re going to go try and take share.” Theysee this as a good opportunity, even though it’s a hardbusiness time for them.
Your smaller players, by default, because theyhave that differentiation, they do OK as well. By theway, [nobody’s doing] well. Everybody is down. Butthere’s a difference between being down and not beingable to survive. Those smaller guys can survive becausethey have that uniqueness to differentiate them.
The hardest part of the market to be in is in themiddle. These are the people that are large enough tocompete with the multinationals, but too large tohave the agility to be in all the little areas with thesmaller folks. They have enough infrastructure tohave some overhead, and they’re not small enough tobe able to weather it.
What is Microsoft doing to help that struggling
middle tier?
The No. 1 thing you can do, because they’re generally local—which means they’re based in thatcountry, or that area—is try to better connect theminto Microsoft. If those salespeople that work in theother parts of Microsoft know that they exist andthey have solutions in that area, they can help bringthem in, potentially, to customers, or help bring themin to retailers or other places. So part of our job is toleverage that broader Microsoft [connection]. Theother thing is making sure that they’re aware of allthe innovation that we’re doing, and helping themdiversify what they’re working on.
Any closing thoughts?
I’ve been in [this] role for a year now. In mytenure here, this is one of the most interesting jobsI’ve ever had. The connection between all the busi-ness groups, the products, the connection with thefield, the connection with the partners, trying tomake all that work is complex and it’s hard, and we’ve
been doing things the same way for a long time. I’mtrying to get the squeakiness out of the gears here.
Microsoft is like this really big engine. It’s prettycomplicated. You can pull all kinds of levers and knobsand everything and you can make a lot of noise but getnothing done. But if you can pull all the levers andknobs in the right direction, you can get the whole com-pany behind you, and you can really moveforward.
One of my goals here is to move OEM—whichhas moved in a certain way, and been very successfulthat way—from having a great culture but being a lit-tle bit isolated, to having a great culture but beingmuch less isolated, much more connected and mov-ing that whole engine on behalf of our partners.
Microsoft has been built based on partners.That’s how our company works; that’s how we oper-ate. We’ve never changed that; we never veered fromthat. I’m pretty passionate on that topic, my manage-ment’s passionate on that topic. We’ve got this greatset of partners out there that we want to help. We’vegot a tough economy, but we’ve got a lot of invest-ment that we’re making into the marketplace, so it’sbeen a busy year to say the least. There’s still a lot ofwork to do, but it’s really a lot of fun. •
Scott Bekker ([email protected]) is editor inchief of Redmond Channel Partner magazine.
RCPmag.com MAY 2009 Redmond Channel Partner 5
STRUCTURE OF MICROSOFT’S SYSTEM-BUILDER CHANNELMicrosoft divides its system-builder channel into several levels based onsales volume. The segmentation helps Microsoft figure out how to commu-nicate with each type of partner.
✱ Multinational Accounts (12): The dozen, super-high-volume PC makersworldwide that sell systems into multiple countries and continents. Thelist includes Hewlett-Packard Co., Dell Inc., Lenovo, Acer Inc., Sony Corp.,Toshiba Corp. and others. This group gets a lot of personal attention frommany Microsoft executives, both in and out of the OEM Division.
✱ Named Accounts (482): Hundreds of large computer makers that generallysell into one geographical area. The OEM Division communicates with thisgroup through account managers.
✱ Depth System-Builder Channel (1,016): The next tier of system builders,each of which has moderately high volume.
✱ Breadth System-Builder Channel (83,150): A broad tier of system builderswith relatively low volume, but a strong relationship with Microsoft.Microsoft communicates with this tier primarily through distributors.
✱ Broad-Breadth System-Builder Channel (148,400): An even broader tier of system builders with low PC volume and less of a relationship withMicrosoft. Microsoft also relies on distributors to communicate with this tier.
Note: Of 373,000 partners in the Microsoft Partner Program, nearly 204,500are OEM System Builders. SOURCE: MICROSOFT
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WPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WPC WPC WPC WPC WPC WPCWPC WPC WPC WPC WPC WIS
TOC
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RCPmag.com MAY 2009 Redmond Channel Partner 9
ChannelReport
anchor, but all the IW ISVs that want toparticipate would be around it. It willmake it very easy for you to get in theIW business to find solutions to aug-ment your solution or upsell your cus-tomers. In the past, you quite honestlystumbled across a few valuable part-ners if you were lucky,” Salzer says.
Opportunities for face-to-facemeetings with senior Microsoft execu-tives, either one-on-one or in verysmall groups, will quadruple at WPCthis year, Salzer adds. Last year,Microsoft set up about 250 partner meetings with executiveslike Watson, Turner, Worldwide Smalland Midmarket Solutions andPartners Corporate VP Eduardo Rosiniand others. This year, Salzer says thecompany is aiming to arrange about1,000 of those meetings with vice pres-ident-level and higher executives fromMicrosoft corporate, WPG, U.S.Partner Group and other subsidiaries.
At a broader, rubber-meets-the-road level, Microsoft will also haveabout 1,500 field employees on-site to
conduct business planning sessionswith the managed partners in atten-dance. While costs are being cutthroughout Microsoft, the commit-ment to keep a high ratio of partneraccount managers and other fieldexecutives to partners at the showappears to remain in place. “We’reactually putting out an announcementto the field from Kevin Turner’s officeabout how important keeping thatratio high is,” Salzer says.
Finally, Microsoft is increasingthe number of partners recognizedwith awards at WPC. The number ofworldwide award categories is goingup about 20 percent from 46 last yearto 58 this year. Award winners onceagain will go on stage during a keynotesession that’s recorded for their pro-motional use, in addition to the stan-dard grip-and-grin award photos withsenior executives.•
Scott Bekker (sbekker @1105media.com) is editor in chief of RCP.
NOVELLREACHES OUTTO CHANNEL The maker of SuSE Linux is recruiting new channel membersfor multiple product lines andwants a partner involved in everydeal the company makes.Lee Pender
In late march, Novell Inc. made whatmight be its biggest headlines of theyear by releasing the latest version ofits operating system aimed at data
centers, SuSE Linux Enterprise 11. But whatmight come as news to partners is thatNovell has seriously increased its commit-ment to the channel in recent months.
Novell is so committed to partners, infact, that the company wants partners inon every deal, channel executives say.The Waltham, Mass.-based company,which has long had a hybrid direct-sales/channel-sales model, specificallyhopes to get partners in on deals early inthe sales cycle and will rely on the chan-nel to serve customers after the sale.
Some partners, especially those that don’t have a long history with the company, will likely be happy to see change.
RENEWED COMMITMENTNovell channel executives say that partof their revamped channel strategyinvolves opening the company up for newpartners. Novell announced enhance-ments to its channel program inFebruary, including a deal registrationprogram and extended training offerings,plus consolidated product SKUs and asingle price list, both aimed at simplify-ing the ordering process and holdingpartners’ costs down.
But there’s more to Novell’s new part-ner plan than just a few tweaks. There is,to hear the company’s channel execu-tives talk about it, a renewed commit-ment to partners, led in part by formerMicrosoft channel executive Steve Hale,now Novell’s vice president for the globaldata center channel, and in part by 15-year Novell veteran Scott Lewis.
What: Microsoft Worldwide PartnerConferenceWhere: New OrleansWhen: July 13-16
HIGHLIGHTS✱ Keynotes from Steve Ballmer,
Kevin Turner, Allison Watson, other executives
✱ Opportunities to meet other partnersand new ISVs
✱ 1-on-1 meeting opportunities with high-level Microsoft executives
✱ About 200 breakout sessions✱ Business planning with PAMs
{ WPC 2009 continued } { Channel News }
If You’re Going
In a nod to economic realities, senior Microsoft
executives like SteveBallmer, Kevin Turner and
Allison Watson will get theMicrosoft Worldwide
Partner Conference rollingwith major keynotes
starting at 9 a.m. Mondaythis year.
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ChannelReport Coming soon: Using Hyper-V and System Center to offer hosted virtual servers
Lewis, vice president ofpartner marketing andenablement for the compa-ny, says that Novell is look-ing for partners not just tosell and implement SuSELinux, the company’s flag-ship product, but to sell andsupport its other offeringsas well.
“We go to market in datacenter, end-user computing,and identity and security,”Lewis explains. “We gener-ally are looking for partnersin one of those solutions.”
Or more than one, he says,noting that expertise in mul-tiple products is a positive.
Those offerings include thePlateSpin product line,which encompasses datacenter management, servervirtualization and disasterrecovery, among other cate-gories. Novell acquired thevendor for $205 millionabout a year ago.
That data center manage-ment category is where a lotof recruitment is takingplace, Lewis says: “If youlook at our end-user com-puting, there’s much more ofa push to grow the partnerswe have. Those productshave evolved in recent years.If you look at identity andsecurity, there’s a push forrecruitment there but it’snot massive. If you look inthe data center space,there’s an overlapped set ofneeds there. That’s notNovell’s historic partnerbase. We’re recruiting there.”
Partner recruitmentisn’t just a numbers game,though. According toLewis: “When we look atpartners, it’s a quality, nota quantity, game. We’renot looking to radicallyincrease the number of partners we have.”
EARLY INVOLVEMENTThe company is looking toincrease the amount of rev-enue it derives from thechannel. Partners accountfor more than half of thecompany’s revenue now,Lewis says, and Hale saysthat figure is increasing. It
will keep going up, too, hepredicts, as Novell contin-ues to reach out to thechannel in more deals.
“It’s one of [our] direc-tives to be inclusive of apartner in every opportunitywe go after,” Hale says, not-ing that the company islooking to get partnersinvolved earlier in the salescycle. “Ideally, then, you’vealready got the partneringrained in the wholeprocess.”
Some of that businessincludes services, some-thing Novell already pro-vides its customers. Halenotes that the company islooking to make Novellservices complementary topartners’ services offeringswhile recognizing thatmany partners now makethe bulk of their revenuesthrough services.
“We want to engage with[partners] to make sure thatthey’re as good as any of ourNovell services people,” Halesays. “Novell services is real-ly there to be the expert ofexperts around Novell tech-nology, and we’ll be there todeliver great services, butvery clearly a part of thecharter is to do partnerenablement.”
The company wants to“pair up Novell serviceswith our partners,” Haleadds. “We want to encour-age that kind of behavior sothat our partners under-stand there’s a market and
Novell will be there to help[them].”
‘CRISP TAXONOMY’The company is also trying to tailor its program to different categories of part-ners, and if some of whatNovell is doing sounds simi-lar to Microsoft’s current andforthcoming partner efforts,that’s no accident—therecently appointed Hale sayshe’s taken lessons fromMicrosoft into his new gig.
“What we’re trying to dois get a very crisp taxonomyof the different types ofpartners out there,” he says.“In general, there’re aboutsix or seven different pro-files of partners, all the wayup from ISVs to SIs.” •Lee Pender is executive editorof Redmond and editor of theRedmond Channel PartnerUpdate e-mail newsletter.
{ Channel News continued } { Virtualization }
LAB EXPERIMENT:HYPERVISORS
Is there really a performance difference between hypervisorsfrom VMware, Microsoft andCitrix? We put them under amicroscope and stress-testedthem for days to find out theanswer. By Rick Vanover
When it comes to hypervisors, there aremany choices now. That’s good newsfor consumers, who were much morelimited even one year ago. Still, whenadministrators go shopping, they lookfirst at hypervisors from VMware Inc.(ESX), Microsoft (Hyper-V) and CitrixSystems Inc. (XenServer). Given thatsituation, it makes sense to do a side-by-side, exact comparison under iden-tical conditions to determine which ofthese is the best-performing product.After all, the hypervisor is still theengine that drives virtualization, evenwith all the management and third-party products built on top.
To that end, RCP’s sister publica-tion, Virtualization Review, recently putthe three challengers through a batteryof tests to find out how they performeda variety of virtualization functions.
TEST OBJECTIVES All the hypervisors offer essentiallythe same base functionality. In thisseries of tests, the objective was to putthe same workloads on each one andsee how they stacked up. The types of
“It’s one of [our] directives to be inclusive of a partner in everyopportunity we go after.”Steve Hale, Vice President of the Global Data Center Channel, Novell Inc.
0509rcp_CR-7-12.v3 4/14/09 2:58 PM Page 10
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ChannelReport Keep up-to-date with the channel with our free e-newsletter, RCP Update—subscribe at RCPmag.com
{ Virtualization continued }
Get More OnlineFor the complete review of the three hypervisors, visit VirtualizationReview.com. There you’llfind a longer version of this article, comparison tables of each hypervisor, a discussion of the testing methodology and a detailed breakdown of testing parameters. FindIT Code: VRMHyper
workloads tested varied to simulate atypical environment in which some virtual machines (VMs) are stressed,and some aren’t. Each platform was subjected to the same test planparameters to give a fair accounting of its performance.
Microsoft Hyper-VHyper-V performed quite differentlyfrom expectations. It’s been a focus ofMicrosoft development efforts, and itshows: Overall, Hyper-V did well in thiscomparison and proved itself a worthyproduct. What’s even more impressive isthat it’s the youngest of these hypervi-sors, by a wide margin. For a version 1offering, Hyper-V stands out inMicrosoft’s product line.
In our tests, Hyper-V did well in allcategories—in fact, it outperformed ESXin most. It’s a real, viable competitor inthe hypervisor space.
Citrix XenServerXenServer may not have ESX’s reputa-tion or Microsoft’s marketing muscle,but the hypervisor definitely held itsown in this comparison. In fact, it didbetter than that: XenServer performedbest over the largest range of categoriesin our tests.
XenServer’s test results are impres-sive, but are they enough to justify areplacement of your current hypervisor?For environments with virtualized sys-tems that have a large number of CPUsand memory-intensive workloads, it maybe a good choice. The caution is thatthose high I/O workloads flirt with not
being good virtualization candidates, somost admins would instinctively placethese workloads on physical systems.Make no mistake, however: XenServerdid extremely well, posting excellentperformance numbers.
VMware ESX 3.5Because VMware is the virtualizationmarket leader, one tacit test objectivewas to determine if ESX is the righthypervisor in an environment with alarge number of VMs doing less work,which is typical for many virtualizationenvironments.
For the first two tests of heavy work-loads, VMware underperformed bothXenServer and Hyper-V. For the lighterworkloads on the third test, the resultswere almost indistinguishable across theplatforms—but ESX had the best resultsin three of the four categories.
Lessons LearnedAfter doing these comparisons of ESX toHyper-V and XenServer, it’s clear that atthe hypervisor level, ESX is optimized for a large number of less-intensiveworkload VMs. For intensive workloadsthat may not be optimized for memory-overcommit applications, Hyper-V andXenServer should definitely be consid-ered—even if that means adding anotherhypervisor to the data center.
All three hypervisors are legitimatevirtualization platforms, and that no onecompany has a monopoly on virtualiza-tion any longer. •Rick Vanover is a systems administrator forSafelite AutoGlass in Columbus, Ohio.
Hyper-V performed quite differ-ently from expectations: It didwell in this comparison andproved itself a worthy product.
{ Postscript }
BEARINGPOINTBREAKING UP Company to sell off its business to competitors.
We reported in the April issue thatBearingPoint Inc., one of the biggest companies in the Microsoft partner ecosystem, had filed for bankruptcy protection in February in order to restruc-ture its debt. Since that issue went topress, the McLean, Va.-based GoldCertified Partner company announcedplans to liquidate its assets.
In late March, BearingPoint announced an agreement to sell its Public Services business to Deloitte Development LLC for $350 million, and a non-binding letter ofintent to sell its Financial Services seg-ment to PricewaterhouseCoopers (PwC)LLP for $25 million. BearingPoint was alsoin negotiations to sell its Japanese con-sulting practice to a PwC subsidiary inJapan. Those deals and a number of otherregional deals that BearingPoint manage-ment was negotiating all require approvalin bankruptcy court.
The management and technology consultancy had about 15,000 employees, of which 2,000 had Microsoft training.
The recession hasn’t helpedBearingPoint,but the company’s problemsstem from debt built up during an acquisi-tion spree from 1999 to 2002 as the compa-ny was being spun off from KPMG LLP.
BearingPoint spent all of 2008 trying to find a buyer. Despite negotiations with 25 potential suitors, the company couldn’t reach a deal and filed for Chapter 11 reorganization ahead of an April 15 dead-line to pay off $200 million to creditors anda probable delisting from the New YorkStock Exchange. —S.B.
0509rcp_CR-7-12.v3 4/14/09 2:58 PM Page 12
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hedeepest glob-al recession in 60years is hitting thechannel like a
sledgehammer. Partners that arefinding business under theimpact-scattered rocks considerthemselves lucky. As Gartner Inc.channel analyst Tiffani Bova putsit succinctly, “Flat is the new up.”
With about 640,000 partnercompanies, according to one ofMicrosoft’s most recent publicstatements, Microsoft’s ecosys-tem accounts for as many as two-thirds of all the channel compa-nies in the IT industry worldwide.
As goes the Microsoft channel, so goes the IT industry as a whole.The sharp global downturn in spending on everything—
including IT—combined with the global credit crunch are radi-cally reshaping the Microsoft partner ecosystem and the way eachpartner company does business. Companies are going out of busi-ness, laying off employees, shifting to services of all kinds, seek-ing suitors and turning to vendors for help. While these moves arefundamentally altering the channel in the short run, many of therepercussions will stay in place in a fundamentally reformed chan-nel when the economy comes out of recession, be that later thisyear, in 2010, in 2011 or later still.
FORCED TO FOLD“There was an interesting theme at the Microsoft Convergence con-ference in March—this notion that this economy has exposed yourwarts. Those were some of the best attended sessions,” says ReedOverfelt, CEO and founder of Optimize Now Technologies LLC, aventure capital-backed consultancy that advises companies on socialmedia strategies. “Realize that Microsoft part-ners are not cash-flow rich. A lot of these compa-nies are going to end up folding,” says Overfelt, aformer general manager at Microsoft.
As founder of the Heartland Tech Group(HTG) partner-to-partner organization, ArlinSorensen is in a unique position to see deepinside the books of many peers’ companies. He’sundertaken a few emergency consultationswith peers to advise them through the toughtimes, and Sorensen gets regular calls from partner company exec-utives seeking a sounding board.
“The partner channel is not that healthy. It’s sort of scarywhen you see the financials as I do at HTG,” says Sorensen, alsoCEO of Harlan, Iowa-based Gold Certified Partner HeartlandTechnology Solutions Inc. Companies on the infrastructure sidethat are hardest pressed come in two forms, says Sorensen. Thereare small companies of one to five employees with just a handful
of customers and fast-growth companies of all sizes that havenever been well capitalized.
“I’m seeing cash flow drive out smaller partners that were mar-ginal in profitability,” Sorensen says. Any kind of slow payment orother burp from their limited handful of customers and those part-ners struggle or close. “They give up the ghost and try to find a job.”
The other type is companies with dynamite sales teams thatstarted without financial capital behind them. “They’ve alwaysjust operated on their ability to sell their latest success. That’s greatas long as payment comes in, but when the economy slows the pay-ment down, you’re continually outselling your cash flow and thecards can tumble pretty fast,” Sorensen says.
One example of an ugly situation exposed by a down economyis a company doing between $2 million and $3 million in sales thatSorensen wouldn’t name. “They were buying a significant amountof their product on eight personal credit cards. They had tappedthem all out, paying 18 percent to 20 percent interest and were los-ing money like crazy. But it was their only way to stay in business.Once you’re in that spiral, it’s impossible to get out of it,” he says.
Problems are especially acute in the Microsoft Dynamicschannel, several channel insiders say. Mo Edjlali, CEO ofTalentFamily Inc., a Fairfax, Va.-based recruiting company, whichplaces Microsoft professionals with partner companies nation-wide and does much of its business in the Dynamics space, notes:“We’ve seen about 75 percent of clients freeze all hiring. On thepermanent placement side, where people are paying premiumfees to find individuals—they’ve just stopped doing that,” Edjlalisays. “Its’ pretty brutal out there.”
Some small firms in the four to 15 person range in theDynamics space have shut down, and larger Dynamics firms havebeen laying off employees aggressively, Edjlali says.
One of the hardest hit sectors in IT has been hardware.Microsoft OEM Division Corporate Vice President SteveGuggenheimer has seen the economy take a toll on the OEMs andsystem builders he works with. The dozen multinational OEMs,
the Dells, HPs, Lenovos, Acers and the like, can play around withcurrency fluctuations to survive and even grab some marketshare. Similarly, small system builders with good niches and lowoverhead are also doing OK. But the middle tier? “The people thatare large enough to compete with the multinationals, but toolarge to have the agility to be in all the little areas with the smallerfolks, I think that’s the hardest part of the market to be in,”Guggenheimer says.
“ The partner channel is not that healthy. It’ssort of scary when you see the financials as I do at HTG ... I’m seeing cash flow drive outsmaller partners that were marginal inprofitability. Arlin Sorensen, Founder, Heartland Tech Group (HTG)
0509rcp_F1Economy.v4 4/14/09 3:07 PM Page 16
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18 Redmond Channel Partner MAY 2009 RCPmag.com
The numbers bear that out. Microsoft’s “named” accountsamong system builders, the category right below the 12 multina-tionals, has fallen from 520 worldwide a year ago to 482 this year,according to a Microsoft spokesperson.
An IDC survey of channel companies released in Marchtapped into broader signs of trouble. Nearly 20 percent of resellerswith annual revenues of less than $5 million reported that theydidn’t have enough capital to continue “business as usual.” A further 37 percent of that group weren’t sure if they had enoughcapital to get through.
In a conference call to discuss the results, IDC analyst JanetWaxman compared that lack of knowledge to flying a plane acrossthe ocean without knowing how to read your fuel gauge. Betweennearly 20 percent without the necessary capital and nearly 40 per-cent who weren’t sure if they’d make it, that’s a lot of potentialplanes ditching in the ocean.
‘EMBRACING THE CHANGE’Matt Scherocman isn’t seeing a lot of other channel companiesfold their tents in the Cincinnati area, but he says it’s definitelybeen harder to scare up work.
“Somebody called it a grind the other day,” Scherocman sayswith approval. To illustrate, he mentions a best practices event hiscompany put on for customers recently. “The event was twice themoney, twice the work and half as many attendees.”
PCMS IT Advisor Group, where Scherocman is vice presidentof consulting services, is a mix of project work, outsourcing and
R E C E S S I O N
STIMULUSBILL: WHAT’SIN IT FORPARTNERS?
By Keith Ward
President Obama’s economic
stimulus bill, designed to help
pull the U.S. economy out of its
worst funk since the Great
Depression, has billions of dol-
lars earmarked for IT spending.
It’s a cash cow the size of Texas,
and savvy IT vendors need to
start planning now to milk some
of that funding.
Officially called the American
Recovery and Reinvestment Act
(ARRA), the law was signed into
effect Feb. 17. Analyst firm IDC
dissected the bill and found that
the impact on IT spending could
be significant. “$788.7 billion
spending in the ARRA will
stimulate approximately $101.2
billion of technology spending in
the energy, health care and
government sectors,” IDC pre-
dicted in a paper.
Some of the chief areas of
opportunity for IT firms include:
✱Health care
✱Broadband access
✱ IT security
✱Upgrades for outdatedcomputer systems
✱ Increased energy efficiency
The lion’s share of the IT-focused
money will go toward health
care. The Administration’s goal
is to develop an “electronic
health record” (EHR) for every
American by 2014, according to
the bill. Another goal is to be able
to efficiently exchange health
records between various facets
of the health-care industry like
doctors and hospitals, while at
the same time safeguarding the
privacy of those records.
About $20 billion has been
earmarked to help reach these
goals. IDC predicts that “this will
be incremental spending that
will take place between 2009 and
2014, with the heaviest spending
taking place in the later years.”
In addition, incentives will be
built into the push to move
toward EHRs. For instance,
physicians who have them in
place by 2011 could receive pay-
ments from $44,000 to more
than $60,000. Hospitals similar-
ly could receive Medicare
incentive payments starting at
$2 million annually by having an
EHR system. On the disincentive
side, Medicare payment cuts
loom for hospitals without such
a system in place by 2015. It’s
worth your while to point out
these provisions to doctors and
hospitals, suggesting, of course,
that you have the expertise to
help meet those deadlines.
Protecting those EHRs moves
into the realm of IT security,
which will be welcome news for
security vendors. In addition to
the need to protect EHRs, securi-
“The partners that are thriving right now are thosewho are embracing thechange in the industry andtalking to customers about the business valuetechnology can create/unlock. They are evolving to deliver Software plusServices [S+S] solutions.They’re moving from project-oriented businessesto services-orientedbusinesses. It’s a more stable business model for partners.” Cindy Bates and Robert Deshaies, Vice Presidents in the U.S.Partner Group, Microsoft
???
0509rcp_F1Economy.v4 4/14/09 3:07 PM Page 18
RCPmag.com MAY 2009 Redmond Channel Partner 19
ty funding will get a boost from
the $2.8 billion allocation to the
Homeland Security Department.
According to Federal Computer
Week magazine, about half of
that money will go toward
information technology-related
programs.
While there’s a huge amoun-
tæabout $77 billionæset aside
for energy initiatives, a small
slice of that is devoted
specifically to IT-related projects.
That includes $4.3 billion for
“Intelligent Grid” computing and
$3 billion for energy-efficiency
initiatives.
Intelligent Grid computing
involves metering and monitor-
ing of power usage for con-
sumers and businesses, allowing
smarter use of resources. It
involves technology on both the
hardware side, for things like
meters, and the software side,
for the software needed to man-
age and analyze the data.
The energy efficiency spend-
ing is also consumer-based, for
things like making homes more
efficient. The bulk of the money
is for developing renewable ener-
gy sourcesænot directly IT-relat-
ed initiatives, although of course
it will still require lots of comput-
ing power and software develop-
ment to produce those green
technologies.
Broadband will become avail-
able to a larger portion of
Americans as well, as the bill
calls for $7.2 billion in investment
in bringing bigger Internet pipes
to rural and underserved areas. In
addition, the law calls for the
Federal Communications
Commission to create a
“National Broadband Plan” that
will guarantee everyone broad-
band access within a set amount
of time.
Interestingly, two different
agencies will be holding the
pursestrings for broadband
development: $4.7 billion will be
distributed through a
Commerce Department pro-
gram, while $2.5 billion is under
the auspices of the Agriculture
Department.
In its advice to vendors, IDC
stresses speed. Many of the pro-
visions in the ARRA are time-
sensitive, and the first ones in
line are primed to get the bulk of
the funds. “It is imperative that
the vendor community be both
aggressive and agile in their
strategy to capture this newly
addressable market. This once-
in-a-lifetime flood of new tech-
nology money requires a new
way of finding and following
opportunities,” states IDC.
A Web site to track the
progress of the ARRA, including
a breakdown of the money spent,
has been established at
www.recovery.gov.
Keith Ward (kward@1105
media.com) is editor in chief of
Virtualization Review magazine
(VirtualizationReview.com).
managed services. “I’m seeing that our project work has sloweddown significantly,” he says. The company’s balance has let themfairly seamlessly shift to more services work. “A midsize companygot rid of their Cisco resource. They said, ‘you guys handle it,’“Scherocman explains of a typical recent deal.
Shifting the balance toward services is one of several meth-ods that Microsoft partner executives say they’re seeing amongpartners who are managing best in the current environment.“The partners that are thriving right now are those who areembracing the change in the industry and talking to customersabout the business value technology can create/unlock. Theyare evolving to deliver Software plus Services [S+S] solutions.They’re moving from project-oriented businesses to services-oriented businesses. It’s a more stable business model for part-ners,” explained Cindy Bates and Robert Deshaies, vice presi-dents in the U.S. Partner Group, in a joint e-mailed response toquestions for this article.
M&AFor some partners, meeting those realities requires a simple shiftin priorities. For others, adjusting is harder and some are lookingfor an exit strategy. One possibility is to get acquired. As Gartner’sBova notes, valuation in this environment can be tricky. “For VARs,no matter what size they are, if 90 percent of their revenue is proj-ect-based, 2009 is going to be very stormy. I think the valuationsof VARs are also becoming much more tied to health and pre-dictability in the business versus top-line revenue.”
That said, deals are happening, according to Mike Harvath,CEO of Revenue Rocket, which specializes in business and man-
agement advice for solution providers with less than $50 mil-lion in revenues. “If you look at overall merger and acquisitionactivity, almost all major indicators show that M&A activity hasfallen off dramatically and completely stalled,” Harvath says.Not so, for the solution provider segment. “It feels like thedemand for these types of transactions in 2009 will be 20 per-cent to 30 percent over what it was in 2008, and in 2008 it waspretty good.”
“I think it’s really two things that are driving [M&A amongsmaller solution providers],” Harvath says. “It’s access to capital,but it’s also the desire to grow quicker than they can fund throughjust cash flow.”
Sorensen has seen M&A activity, too. “I’m getting lots of callsfrom brokers that are trying to put together deals. They’re lookingfor larger partners, primarily managed services organizations,that they want to roll up right now.”
NO MAGIC BULLETSAt the same time, many vendors are working overtime to help theirchannel partners by advising them on how to thrive, or at leastsurvive until the recession ends. IDC analyst Darren Bibby, whoadvises vendors on relations with their channels, says, “Every ven-dor expected that every other vendor is going to launch some magicbullet program.” Nobody has that magic bullet, he says.
Instead, each vendor’s materials tend to be repackaged,greatest hits-style tips and programs that are still extremely relevant. Microsoft is a good example, Bibby says, with pragmaticadvice about using Microsoft Financing; pushing cloud computing-style services; capturing customers’ spending out of operational
0509rcp_F1Economy.v4 4/14/09 3:07 PM Page 19
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22 Redmond Channel Partner MAY 2009 RCPmag.com
expenditures, which are still flowing, rather than capital expen-ditures, which are not; and good sales practices. “After all,” Bibbynotes, “getting sales has never not been an issue.”
To that point, Microsoft’s Deshaies and Bates said in theirresponse, “You have to really focus on the basics of salesmanship.That means being prepared when you go on customer calls, adjust-ing plans in a timely way, and really checking in with [buyers] a lotmore often than you did before.”
Financing is tricky. Dave Sobel, CEO of Evolve Technologies, aGold Certified Partner in Fairfax, Va., has had good luck with theMicrosoft Financing program. His customers have been able to getapproved, and he notes that Microsoft Financing continues to reachout to him for new deals. But in the channel survey, IDC noted thatnearly half of the respondents reported having more difficulty get-ting their customers financed across all financing and leasing pro-grams (not just Microsoft’s). And Heartland’s Sorensen says word isgetting back to him that partners are having more trouble gettingcredit-card limits increased and that distributors aren’t as quickanymore to approve deals bigger than ones they’ve OK’d in the past.
“A year ago, if you had a large deal, you could go to a distribu-tor and they’d upgrade you to get over a hump. Everybody is justmore cautious. The distributor is being fiscally responsible, whichis what they should do. But a lot of partners have operated basedon the fact that the distributor [didn’t used to be] as responsible asthey should be,” Sorensen says.
WHICH CHANGES WILL LAST?Sobel, like many people interviewed for this article, saw busi-ness fall off a cliff in January. Also like others we interviewed,Sobel saw orders pick up slightly in March. “My sense of this,from talking to my customers, was they were holding off to seewhat happens. Now they are actively engaging in the projectsthat they need to do. They’re definitely not doing any fluff proj-ects. They’ve decided that this is the way things are going to befor a little while, and they’ve got to get back to business.”
Even if things start to turn around quickly, several trends havebegun or accelerated that will leave the Microsoft channel a dif-ferent place than it was before the recession began in late 2007.
Structurally, there are the partner companies that have gone,or will go, out of business. That includes everything from massiveGold Certified Partner and systems integrator BearingPoint Inc.,which is being liquidated in bankruptcy court, down to the soleproprietor who puts herself on the job market.
Employees caught up in the layoffs in the Dynamics channeland elsewhere may have a hard time finding new jobs in the fieldamid the glut of candidates and could be forced to move to fieldsother than IT. That could mean even some highly skilled, well-known channel veterans won’t be back.
Partners report their attitudes toward business are becom-ing more conservative, now that they’ve experienced how badthings can get. Says Sobel, “We’re doing a lot tighter financial pro-jections. What’s our non-growth plan look like? We have a versionof the plan that says, ‘What happens if we shrink, and what are the
trigger points?’ I wasn’t talking like that two years ago. Part of mehas to say maybe I should have been doing this before.”
The recession is highlighting for many partners how impor-tant it is to develop and promote business-process expertise. Thenext major meeting of HTG will feature sessions about business-process standards. “That’s where I see our next step needing to bein the channel in 2011 or 2012. We’re working on helping our mem-bers with service delivery that’s consistent and follows process,”Sorensen says.
Throughout the recession, partners have been trying to tapinto customers’ operational budgets through cloud computing,managed services and outsourcing. Will partners revert to proj-ect-based revenues again when things turn around?
“That’s the million-dollar question isn’t it?” notes Gartner’sBova. Views on the question vary widely.
Bova contends that solution providers have been noddingtheir heads for years about the need to move from project-basedbusiness models to business process-based models or trusted-advisor models, and toward recurring revenues.
“You don’t have the masses that have moved to cloud oppor-tunities or managing based on service-level agreements. Althoughyou’ve had partners say they need to move from products to solu-tions and from transactions to predictability, I would say the bulkfits in the value-added reseller [category],” Bova says. At the endof the recession, she adds, “There’s still going to be a majority oftechnology purchased exactly the way it’s purchased today. If part-ners want to continue focusing on doing business the same waythey have for the last 10 years, they absolutely can. What will startto get challenging is pricing.”
Scherocman sees the recession-based shift toward S+S, SaaSand managed services as part of an old cycle.
“Do I think it’s a shift? Yes. I don’t think the economy is chang-ing that shift but it’s accelerating it. It’s similar to the centraliza-tion and decentralization of IT. We go through cycles where every-body says centralization makes sense. Then it shifts back,”Scherocman says.
Optimize Now’s Overfelt is emphatic that the change towardthe cloud is more permanent, and the channel needs to adjust.“This economy is going to hasten SaaS and the cloud as primaryproviders.” Moreover, Overfelt says those changes don’t bode wellfor the current size of the Microsoft channel. “Because of that, theMicrosoft channel is going to have to shrink. That business is com-ing from some place. Some Microsoft partner or channel partneris losing that business.” •
Scott Bekker ([email protected]) is editor in chief of RCP.
R E C E S S I O N
Get More OnlineFor more on this topic, log on to RCPmag.com to find the complete e-mailinterview with Microsoft U.S. Partner Group Vice Presidents RobertDeshaies and Cindy Bates, and an item about how the fortunes ofMicrosoft’s billionaires have fared. FindIT code: NewID
0509rcp_F1Economy.v4 4/14/09 3:07 PM Page 22
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24 Redmond Channel Partner MAY 2009 RCPmag.com
ILLU
ST
RA
TIO
N B
Y IS
TOC
K.C
OM
W hen it comes to the Microsoft-based IT ecosystem,the biggest show of the year for new product launches and demonstrations is Tech·Ed NorthAmerica. Microsoft is holding that show this month
in Los Angeles. Microsoft has produced a lot of market-moving technology over
the years, but third-party independent software vendors (ISVs) havealways been there with the fill-ins and add-ons that make Microsoft’swares better and keep the company’s ecosystem blooming. Thosevendors also produce some great technology of their own.
For this Tech·Ed 2009 preview, we spoke with many of the third-party vendors in Microsoft’s world to find out what they’ll beannouncing and demonstrating May 11-15 at the show. Some ofthese new technologies are sure to make strong additions to the portfolios of products offered by Microsoft partners.
ISVs provide the critical tools and applications that complete Microsoft solutions. Microsoft Tech·Edis traditionally where manyof those vendors announcetheir next products. Find out what third parties have coming at Tech·Ed NorthAmerica 2009 this month.By Lee Pender
F E A T U R E | T E C H - E D T H I R D P A R T Y
BUILDINGECOSY
0509rcp_F2_TechEd_24-28.v3 4/14/09 3:28 PM Page 24
RCPmag.com MAY 2009 Redmond Channel Partner 25
K2 (K2.COM)K2 is a division of SourceCode Technology Holdings Inc., based inMicrosoft’s back yard of Redmond, Wash. The company providesa platform aimed at simplifying business process automation andprocess management. At Tech·Ed, K2 will be demonstrating K2blackpoint, a Microsoft Office SharePoint Server add-on.
K2 blackpoint, released in March, is “focused on making iteasy to compose process- and workflow-based applications onSharePoint,” company officials say. With blackpoint, non-tech-nical users can build SharePoint workflows and applicationswithout using code.
The company will also be demonstrating its K2 connect product, an add-on to its own blackpearl product. K2 connect,released in February, helps non-developers bring informationfrom SAP AG’s enterprise resource planning applicationstogether with Microsoft Office, SharePoint and technologybuilt on the .NET platform.
RAXCO SOFTWARE INC. (PERFECTDISK.COM)The provider of disk defragmentation software, based inGaithersburg, Md., rolled out its PerfectDisk 10 line of storage-management products in January and will make it the focus ofthe company’s presence at Tech·Ed.
The main new player in the PerfectDisk fold is PerfectDisk 10Virtual Enterprise Edition, which provides, the company notes,“virtual awareness to enterprise disk defragmentation.” The newproduct works with virtual products such as VMware’s ESXServer and Microsoft’s Hyper-V, and automatically determineshow often it should run a defragmentation session based on theresources the physical host has at a given time.
Virtual Enterprise Edition is available starting at $249.99. Itand the other PerfectDisk 10 products are available online at thecompany’s Web site.
OUT THESTEM
0509rcp_F2_TechEd_24-28.v3 4/14/09 3:28 PM Page 25
26 Redmond Channel Partner MAY 2009 RCPmag.com
IDERA (IDERA.COM)Idera, based in Houston and a division ofBBS Technologies Inc., will roll intoTech·Ed ready to show off SharePointbackup, the latest version of its applica-tion that provides backup, search and doc-ument recovery for SharePoint.
Version 2.0 of SharePoint backupadds enhanced scheduling capabilitiesand lets administrators preview docu-ments before recovering them.SharePoint backup is one of a large groupof SharePoint tools Idera provides.
Idera also introduced SQL secure 2.5in March. The application lets databaseadministrators monitor SQL Server secu-rity and track security problems. SQLsecure, along with sister product SQLcompliance manager, is especially usefulfor companies with strict compliance reg-ulations, Idera CEO Rick Pleczko says.
“It’s like having a video camera onyour database that can alert you to auditviolations,” he explains.
The new version of SQL secure letsadministrators take a snapshot of employ-ee access permissions to compare to a laterpermission list. It also provides templatesthat allow users to drill down into specificcompliance regulations, says Juan Rogers,SQL secure product manager at Idera.
SPECIAL OPERATIONS SOFTWARE(SPECOPSSOFT.COM)All the way from Stockholm, Sweden, withU.S. headquarters in Portsmouth, N.H.,comes Special Operations Software withits Specops Virtual Deploy product. Thisnew offering works with MicrosoftApplication Virtualization (App-V) todeploy applications virtually using GroupPolicy. Thorbjörn Sjövold, CTO of SpecialOperations Software, explains: “We’retaking the concept of Microsoft App-V andmaking it more simple for users than it istoday. We let you use Group Policy todeploy virtual bubbles. You pick your bub-bles and deploy them out there.
“The good thing about Group Policyis that everybody knows how to use it,”
Sjövold continues. “Since we don’t requireany infrastructure, you’re up and runningas soon as you have your first bubble.”
He adds: “What you can do with App-V is, you can take Office 2003 and virtualize it. It’s a bubble that lives insideits own little world. Whatever you changeinside 2003, it doesn’t affect the operating system.”
Johan Ögren, president of the company’s North American operation,adds that Special Operations Softwarewill be giving away gold bars at its Tech·Edbooth. “The marketing message this yearis all about gold,” he says. “We believe ourproducts are solid investments.”
RED GATE SOFTWARE LTD.(RED-GATE.COM) From Cambridge, England, comes RedGate Software with a new archiving toolfor Exchange, sensibly called ExchangeServer Archiver.
Company officials promise that thenew tool will be “simple to try, install andadminister” and will deliver an interfacewith an e-mail-preview pane, instantretrieval of e-mails and search capabilitiesfor archived and non-archived e-mails.
“Exchange Server Archiver reducesthe time for archiving and restoring mes-sages manually. The automated processand granular archive rules are a great helpfor any Exchange administrator,” says onebeta tester, via a company spokesperson.
Red Gate takes its name from one ofthe earliest tech inventions, somethingthat came along long before the micro-processor. Company spokespersonMichael Francis explains: “If you’re won-dering where the name Red Gate camefrom, we’re named after Via Porta Rossa[Red Gate Street] in Florence, Italy, closeto where Leonardo da Vinci invented thedatabase in 1512.”
MVP SYSTEMS SOFTWARE INC.(MVPSI.COM)MVP Systems Software rolls in fromFarmington, Conn., to Tech·Ed, where it
will demonstrate for the first time at a tradeshow a free monitor for its Job Access andManagement System (JAMS) software.
JAMS is a batch-job scheduling sys-tem, and JAMS Monitor provides a singu-lar view through which users can monitorand manage Windows Task Scheduler andSQL Server jobs running in multipleservers. A “Convert to JAMS” function letsusers move their processes into JAMS, amove the company says yields betterscheduling capabilities and opens up features such as dependency triggers,event-based scheduling and alerting.
Free copies of JAMS Monitor areavailable at the company’s Web site.
SAPIEN TECHNOLOGIES INC. (SAPIEN.COM)Just upstate from Los Angeles is SapienTechnologies, based in Napa, Calif.
At Tech·Ed, Sapien will be demon-strating iPowerShell. Released in March,iPowerShell is a product that blends twoworlds by bringing PowerShell to theiPhone. iPowerShell is available for down-load at Apple Inc.’s App Store.
iPowerShell “contains full descrip-tions of each and every core PowerShellversion 1 cmdlet, their syntax, parametersand examples of proper usage,” the com-pany says. It also includes help topics and asophisticated search function.
“This news is important because itshows Sapien’s commitment to the IT pro-fessional by expanding its software offer-ings and broadening its customer base,”says Ferdinand Rios, the company’s CEOand co-founder. “Additionally, with theiPowerShell release, we’re showing thatwe’re supporting the newest technologyand making it easier for IT pros to get theirjob done, both locally and remotely.”
DTSEARCH CORP. (DTSEARCH.COM)Bethesda, Md.-based dtSearch will bedemonstrating a new line of its text-retrieval software at Tech·Ed.
The company rolled out a whole newdtSearch suite in March, version 7.6,
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which includes a broad array of productsfor searching for files on a PC or across anetwork, publishing large volumes ofsearchable data to an IIS intranet orInternet site, and publishing searchabledocuments or Web content to portablemedia, among other functions.
Two components of the suite,dtSearch Engines for Windows and .NETand the same product for Linux, let devel-opers at dtSearch bring search functionali-ty to applications. The new version of theWindows and .NET product adds expand-ed sample code for Microsoft’s latestrelease of Visual Studio.
DATACORE SOFTWARE CORP.(DATACORE.COM)DataCore will travel from sunny FortLauderdale, Fla., to sunny Los Angeleswith what the company calls its “Pimp MyStorage” crew. The crew will bring downhalf an IT department’s storage infrastruc-ture. The mystery for attendees will be tofind out whether the system’s virtualmachines (VMs) keep working.
The company will also be showingoff new capabilities it announced inApril, including 64-bit “mega caches,” as the company calls them, which highlight its new SANmelody 3.0 andSANsymphony 7.0 products. With thenew products, a SAN-wide cache willnow hold the entire working set of a largenumber of VMs.
Another new option in both productsis Transporter, a migration facility that,the company says, “migrates disk imagesand workloads between different operat-ing systems, hypervisors and storage sub-systems—eliminating lengthy backupsand restores due to complicated formatconversions.”
SCRIPTLOGIC CORP.(SCRIPTLOGIC.COM)ScriptLogic has a product release forTech·Ed: the latest version of ActiveAdministrator, its application for manag-ing Active Directory.
Among other functions, ActiveAdministrator 5.1 gives administratorsenhanced capabilities to schedule data-base maintenance and provides self-moni-toring of server components. The applica-tion also offers centralized event monitor-ing and reporting, as well as simplified del-egation of AD and backup and recoveryfunctionality.
Also at Tech·Ed, Boca Raton, Fla.-based ScriptLogic promises to announce“a new product line to bring a highly cost-competitive, instant remote assistancecapability for IT administrators to supportusers everywhere in the enterprise and onthe Internet,” company officials say.
STEELEYE TECHNOLOGY(STEELEYE.COM)Down from Menlo Park, Calif., comesSteelEye Technology, which will bedemonstrating the latest version ofDataKeeper Cluster Edition. The softwareoffers high availability and disaster recov-ery by working with Hyper-V andWindows Server Failover Clustering.
Greg Ewald, vice president of market-ing for SteelEye, says the company willshow at Tech·Ed how DataKeeper ClusterEdition handles “Quick Migration of live
running Microsoft Hyper-V virtualmachines from coast to coast … replicat-ing clustered SQL Server running inHyper-V VMs across data centers, [and]Hyper-V, [Windows Server FailoverClustering] and DataKeeper ClusterEdition working together to provide sim-ple and powerful disaster recovery forExchange 2007.”
Previews of the demos are availableat SteelEye’s Web site.
SANBOLIC INC. (SANBOLIC.COM)Sanbolic will announce at Tech·Ed thatit’s adding distributed snapshots to MelioFS, its clustered file system. The productwill also have a generic Volume ShadowCopy Service (VSS) provider—availablefrom both physical and virtual serverswhen Sanbolic’s file system is in use—which third-party data-protection prod-ucts can invoke.
The company, based in Watertown,Mass., will also publish APIs for scriptingand scheduling the VSS provider.Sanbolic is also making it possible forusers to invoke Melio or a third-party VSSprovider from the company’s data-protec-tion software, called Simple InformationLifecycle Provider (SILM). SILM will nowbring better capabilities for scripting andscheduling.
MARATHON TECHNOLOGIES CORP.(MARATHONTECHNOLOGIES.COM)Marathon and Microsoft announced inJanuary a development and marketingdeal aimed at providing fault-tolerant andhigh-availability computing for enterprisecustomers running applications onWindows servers. The agreement includesenhanced compatibility betweenMarathon’s everRun fault-tolerance soft-ware line and Windows Server 2008, aswell as other development objectives.
At Tech·Ed, Littleton, Mass.-basedMarathon, will “present a joint session onMicrosoft clustering technology andMarathon’s extension of Windows Serverhigh availability to continuous availability
RCPmag.com MAY 2009 Redmond Channel Partner 27
“The marketingmessage this
year is all about gold.
We believe ourproducts are solid
investments.”
Johan Ögren, President of Special Operations Software’s
North America Division
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through software fault tolerance,” compa-ny officials say.
JNBRIDGE LLC (JNBRIDGE.COM)JNBridge, located in the mountains ofBoulder, Colo., will bring to the beachesof Los Angeles JNBridge Pro 4.1, anupdate to the company’s main product.JNBridge’s interoperability productsconnect Java- and .NET-based compo-nents and applications.
The primary new feature ofJNBridge Pro 4.1 is that it will offer sup-port for Windows PresentationFoundation. CTO Wayne Citrin will be inthe company’s booth at Tech·Ed to demohis company’s updated product and totalk interpoerability with attendees.
SHERPA SOFTWARE (SHERPASOFTWARE.COM)Sherpa Software released the latest ver-sion of its Archive Attender e-mail-man-agement software in March, and companyofficials will be demonstrating the updat-ed product at Tech·Ed. But Sherpa willalso be rolling out Transfer Rules, a newwrinkle for its Mail Attender product for e-mail archiving, content management andpolicy enforcement.
Tom Hand, vice president ofExchange development for Sherpa,explains Transfer Rules for Mail Attender:“The core product can search mailboxes,.PSTs and public folders, and search forany match within the criteria set you pro-vide, and take action. [With TransportRules], we now serialize that data out,transport it across the network and serial-ize it back into that data store. It doesn’trely on direct API to API connection,”Hand says.
Sherpa’s Himalayan name—Sherpasare native guides who assist climbers in thefamous mountain chain—is intentional,even though the company is based nearPittsburgh, Hand says. “We sort of guideyou through e-mail terrain,” he explains.“We guide you to our proper solution.That’s sort of our mantra here.”
VMWARE INC. (VMWARE.COM)The Palo Alto, Calif.-based virtualizationtitan will have a presence at Tech·Ed. Thecompany’s focus will be vSphere, whichthe company calls the industry’s firstcloud operating system.
Rick Vanover, writing in March forVirtualizationReview.com, a RedmondChannel Partner sister site, noted thatvSphere offers “new support for thin-pro-visioned disks from ESX 4. ESX 3 did notoffer thin provisioning by default, but itwas possible through the vmkfstools command.”
Vanover expanded further on theimpact of vSphere: “Looking forward toESX 4, VMware shops have an advantagedue to the Virtual Machine File System (orvStorage VMFS), which can get you out ofa jam. One of the new features coming invSphere is Enhanced Storage VMotion,which permits a conversion from a fullyprovisioned virtual disk to a thin-provi-sioned virtual disk.”
LIEBERMAN SOFTWARE CORP. (LIEBSOFT.COM)Lieberman will be right at home in LosAngeles, given that its corporate head-quarters are located in the city on theAvenue of the Stars. The star forLieberman at Tech·Ed will be EnterpriseRandom Password Manager.
An update to the product to beunveiled at Tech·Ed will offer privilegedaccount password management fromwithin the consoles of Microsoft SystemCenter Operations Manager and SystemCenter Configuration Manager. Theupdate will enable security recovery ofadministrator passwords directly fromSystem Center, company officials say. •
Lee Pender ([email protected]) is executive editor of Redmond ChannelPartner’s sister publication Redmondmagazine and editor of the RedmondChannel Partner Update e-Newsletter.
F E A T U R E | T E C H - E D T H I R D P A R T Y
MEANWHILE, BACK ON THE MOTHER SHIP
Tech·Ed is Microsoft’s show, above all, and Microsoft will have plenty of its own products
to showcase. Microsoft tends to keep some of its product announcements close to the
vest, but company officials have revealed some of what Microsoft will be focusing on at
the show.
Among the products that will be on primary display, company officials say, are
Windows Server 2008 R2, Operations Manager 2007 R2 (due this month), Service
Manager beta 2 (due this summer) and System Center Essentials version 2 beta public
release (due this month or in June). Microsoft will feature System Center Essentials, the
company’s midmarket IT management suite, in a special technical session.
Other hot topics, Microsoft folks say, will include Virtual Machine Manager 2008 and
Virtualization, System Center data center solutions, and the Server Management Suite
Enterprise and System Center community and influencer programs, due at press time to
debut in April or May.
System Center will clearly get plenty of the spotlight at Tech·Ed. Much of the
messaging around the product line will involve what one Microsoft product manager calls
“cost efficiency,” or, quite simply, how System Center helps contain IT infrastructure-
management costs.
As for other noteworthy events, Microsoft Learning will be distributing vouchers
worth 50 percent off a certification exam to all attendees. —L.P.
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At the Worldwide Partner Conference (WPC) in July,Microsoft is preparing to formally launch a newReady to Go Campaign (RTG). The RTG is designedto help large hosting companies—and, eventually,
small VARs—sell hosted communications services that bringenterprise-class messaging and collaboration services to smalland midsize businesses (SMBs).
ISTO
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With a new Ready to Go Campaign, Microsoft aims to help hosters andVARs sell full-featured e-mail services to small businesses. It’s anappealing opportunity, but trust remains an issue. By Scott BekkeryScott Bekker
Putting the Right on Hosted Messaging
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B R A N D I N G M E S S A G I N G
The RTG is called Microsoft Communication Services.RTG materials, such as marketing collateral and demovideos, were quietly made available on the Microsoft PartnerPortal for U.S. partners in January.
In addition to creating another campaign using the popularRTG template, Microsoft officials think they’ve hit on a successfulmessage with the Communication Services theme that couldbreak through some of the challenges of positioning hosted mes-saging and collaboration services for small business customers.
“Using Microsoft Communication Services allows us to unifythe branding, so we don’t have to talk in abstract terms like hostedmessaging,” explains Greg Olsby, industry manager, WorldwideSoftware plus Services, Microsoft Communications Sector.
As many as 65 percent to 70 percent of U.S. SMB customersuse Microsoft Outlook, according to Microsoft research, but mosttend to use Outlook as a front-end for simple POP mail accounts.“From a messaging perspective, Exchange and SharePoint arevery well-known in the enterprise space and among IT. The vastmajority of SMBs don’t have that same understanding. What we’retrying to do is focus on the key pain points that they’re feeling,”Olsby says.
The new marketing materials focus on the capabilities thatthe hosted services provide, rather than the server-based tech-nologies that enable those capabilities. A marketing diagram forCommunication Services mentions Microsoft Office Outlook 2007,but no other Microsoft products. Instead, it shows the devices SMBsuse—a cell phone, a PC, a regular phone and a Web browser—andthen it shows the functions that Communication Services willallow. They include Outlook e-mail, Outlook fax, Outlook voicemail, contacts, appointment requests, tasks, document sharingand document search. One tagline promises to “Simplify YourBusiness Life.” Another tagline offers: “Integrated CompanyCommunications/Access on the Go/Professionally Delivered.”
At a recent Microsoft Hosting Days event for Microsoft part-ners in Reston, Va., a Microsoft presenter told attendees, “Weintend to use these terms on a global basis for many years to come.”
The new approach has two audiences within the Microsoftchannel community. The first audience, and the one which mustadopt the new terminology and programs in order for them to takeoff, are the 2,000 hosting partners worldwide that offer hostedExchange. The second Microsoft Partner Program audience issmaller VARs, some of which already resell hosted services offeredby those hosting companies, and others who don’t yet. A benefit ofthe new approach, as opposed to the Microsoft BusinessProductivity Online Suite that’s also a through-partner S+S offer-ing, is that the new RTG materials don’t interfere with existingprivate-label approaches. Additionally, Microsoft is not involvedin directly billing customers.
A COMCAST PILOT PROGRAMThe term “Microsoft Communication Services” has been in usefor more than a year. Microsoft piloted the approach with cablegiant Comcast Corp., at the time the second-largest broadband
provider in the United States with about 12.4 million high-speedInternet customers.
In announcing the partnership in November 2007, ComcastBusiness Services President Bill Stemper explained how Comcastwould pitch the service, which was being bundled at no addition-al cost with its business Internet service. “Now, as part of theirComcast high-speed Internet service, [small business customers]can quickly schedule meetings, share a common address book, or easily share or review important documents, which benefitsthe entire business,” Stemper explained. Added MicrosoftCommunications Sector General Manager Michael O’Hara:“Comcast is helping remove the traditional barriers that have keptSMBs from adopting these tools in a meaningful way.”
Olsby declines to provide numbers on the progress of theComcast pilot. “I can’t share numbers, but it’s been very effective,”Olsby says. “That proof point is what emboldened us to move for-ward with a broader program.”
‘TENS OF MILLIONS’Microsoft sees a huge market for hosted messaging services offeredby SMB partners, and hopes the Communication Services mes-saging will crack that market wide open.
“Think of Communication Services as a marketing vehicle,”Olsby explains. “This isn’t a technology. These are marketing toolsthat will help those partners that have put together a solution
READY TO GO CAMPAIGNSThe new Microsoft Communication Services Readyto Go Campaign (RTG) will join a growing list of RTG campaigns:
✱ Application Platform Optimization
✱ Application Platform Optimization: Business Intelligence
✱ First Server, Right Server
✱ Linux Win Back
✱ Microsoft Dynamics CRM
✱ Microsoft Dynamics Financial Management Solutions
✱ Microsoft Exchange Server 2007
✱ Microsoft Online Services
✱ Mobility
✱ Microsoft Office 2007 Productivity Boost
✱ Optimize and Secure Your Core Infrastructure
✱ Search, Share, Collaborate with Office
SharePoint Server 2007
✱ Security and Reliability
✱ Small Business PC
✱ Unified Communications
✱ Upgrade the Desktop
✱ Web Platform
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based upon things like Exchange, SharePoint and OfficeCommunications Server. They can reduce the cost on collateral andmarketing campaigns. It will make it easy to communicate. Andwhen a partner has a win, we’ll make sure that we can leverage thelearnings and the successes for the broader community,” he adds.
Right now there are 2 million users of hosted MicrosoftExchange, using the full MAPI-based capabilities such as sharedcalendars and shared tasks. Microsoft estimates that there are 180million to 200 million e-mail users in SMBs worldwide. “We oughtto be targeting tens of millions of users, not millions,” Olsby says.
Microsoft’s understanding of the types of SMB companiesthat might be interested in a hosted solution is expanding, aswell. Originally the sweet spot was companies with fewer than100 seats. But more and more customers with up to 250 seats,and some with up to 1,000 seats, are interested in getting out ofthe Exchange Server management business.
Olsby expects to have about half a dozen U.S.-based hostingpartners using Communication Services by the WPC launch.“We’ve seen interest at every level. If we could get 100 hosting part-ners over the next five years, I’d be very happy,” Olsby says.
If some larger hosting partners are among the participants,the math of the addressable market grows pretty large prettyquickly. Many of the hosters in the top tier, as defined by size,already reach the SMB market through value-added resellers,who resell private-label messaging solutions
“Eventually, we’ll find that more resellers are using this Readyto Go campaign than hosters, just because of the multiplier effect,”Olsby predicts.
Olsby is aware that driving customers toward the cloud can-nibalizes other parts of Microsoft’s business. “Will it have an impacton Small Business Server? I think that Software as a Service andSoftware plus Services will have an impact on all of our serverproducts,” Olsby says. “That’s why we’re putting so much effort onthe cloud.”
He also acknowledges that some customers will want to buydirectly from Microsoft, but says that it’s usually in Microsoft’sinterest to go through partners to reach SMB customers.
“Our research indicates that the likelihood of a customer buy-ing hosted Exchange or SharePoint is considerably higher whenthey buy from a partner and when they’re aware that Microsofttechnology is involved. Very few SMB customers actually buydirectly from us,” Olsby notes.
The reaction of an executive at one large hosting company,which is not yet involved in the program, suggests that Microsoftwill face some challenges in trust both from hosting partners andfrom VARs. The challenge stems not from the merits of the newprogram, but instead from Microsoft’s announcement last July ofthe Business Productivity Online Suite, its related direct-billing ofcustomers and its messaging packages that were hosted inMicrosoft’s data centers.
“Not only did Microsoft alienate some of the hosting providersby saying ‘We’re going to compete with you,’ but they also alienat-ed a significant number of VARs by saying, ‘We’re now going tocompete against you with an alternative SaaS model,’” says DougHoward, president of USA.NET, a Gold Certified Partner based inMilford, Conn. “It confused the marketplace and really upset a lotof the VAR channel.”
GroupSPARK, a Burlington, Mass.-based hosting companyoffering private-label SaaS both direct and through its resellerchannel, will take advantage of bits and pieces of the RTG cam-paign, says Senior Executive Officer Bill Flynn.
“I think, in general, it’s a great program,” Flynn says.“Obviously the might of Microsoft and the resources they have todo some research and bring that to a hosting provider has a greatvalue.We would take a lot of that information, and customize it toour own messaging that we’ve crafted.”
Flynn adds that the demo videos Microsoft has created as partof the campaign are of great value to his company. WhilegroupSPARK is one of the largest Microsoft partners doing hostedExchange, SharePoint and Dynamics CRM, the company’sresources for creating high-end videos are no match for whatMicrosoft can do. “People are moving toward a visual representa-tion of things. They like to see how the products work together,” hesays. The Microsoft videos could be especially helpful for the lesstechnically savvy customers who have been showing a growinginterest in SaaS solutions lately, he adds.
With a channel of private-label VARs, groupSPARK is exactlythe kind of hosting company that Microsoft has in mind when itdescribes the RTG campaign as a benefit for both hosters and theirVARs. But Flynn isn’t sure yet that it makes sense for groupSPARKto push the Microsoft materials out to his channel. “My inclinationis we would use it for ourselves. There are some of our partnerstoday that are also Microsoft partners that are aware of this, andwe may talk to them,” Flynn said. “But it is a very Microsoft-focusedmessage. We certainly leverage a lot of Microsoft products, but wedon’t only leverage Microsoft products. We want the marketing tobe about [our partners and] groupSPARK.”•
Scott Bekker ([email protected]) is editor in chief of RCP.
RCPmag.com MAY 2009 Redmond Channel Partner 31
“Using MicrosoftCommunicationServices allows us tounify the branding, sowe don’t have to talk in abstract terms like hosted messaging.” Greg Olsby, Industry Manager, Worldwide Software plus Services,Microsoft Communications Sector
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The best informationwe can find each
month to helpMicrosoft
partners raiserevenues andboost profits.
PRODUCTSSERVICESPROGRAMSEVENTSANSWERS
✱
Computer maker introduces design-drivenAdamo and heavy-duty Latitude E6400 XFR.
At a time when netbooks command the high ground interms of industry buzz and sales growth, Dell Inc. isdoubling down on higher-end, higher-margin mobilePCs. The Round Rock, Texas-based computer giantfired shots across the bows of both Apple Inc. andPanasonic Corp. in March.
The release of the Dell Adamo laptop took aim atApple’s dominance of design-intensive laptops suchas the MacBook and MacBook Air. On the other, function-dictates-form end of the spectrum, the newDell Latitude E6400 XFR provides Dell’s latestanswer to Panasonic’s line of Toughbook products.
High FashionDell launched the Adamo with a fashion-inspiredprint magazine campaign featuring models carryingthe laptop while wearing clothing straight off thefashion runway. In addition to the accessories youmight expect for what Dell calls the “world’sthinnest” laptop—a USB stick, an external hard drive,a Blu-ray disc drive—is an exclusive bag by Tumi, amaker of luxury travel items. Given that a bag is a fea-tured accessory, it’s no surprise that the other acces-sories are color-matched in the laptop’s onyx andpearl options.
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The new Dell Adamo
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While netbooks bring screen sizes of9 inches or less, the Adamo features a13.9-inch display with a high-definition,edge-to-edge glass display. Also stan-dard in the laptop, which starts at$2,000, are WiFi, Bluetooth, solid-state drives, DDR3 system memory andIntel Core 2 Duo processors with IntelCentrino technology.
Like Apple, Dell is paying attentionto detail, right down to the packaging.According to Dell’s announcement ofAdamo, the purchase includes: “Artfulpackaging in which the product arrives‘floating’ in a clear box with minimal clutter—a beautiful experience for asophisticated product.”
It’s a far cry from the “Dude, you’re getting a Dell” campaigns of yearspast. The shift at Dell toward moreattention to design has been evidentfor more than a year, according toindustry analyst Rob Enderle, principalanalyst with Enderle Group. Enderlesays he believes the Adamo laptop willdraw buyers to the Dell brand.
High Impact Dell is also taking another run atPanasonic for the dust, drops and bul-lets crowd.
Dell released the Latitude E6400XFR, the latest entry in the fully ruggedlaptop category that Dell first entered ayear before with the Latitude XFR D630.The new version is 5 percent lighter thanthe D630, 15 percent thinner than theD630 and can fall from 25 percent higherthan any computer in its class, accord-ing to Dell. Dell doesn’t brag about thisnext percentage, but it’s also 10 percentmore expensive than the D630, with astarting price of $4,299.
The system debuted at FederalOffice Systems Exposition in March inWashington, D.C., which is an appropri-ate venue given the many military,homeland security and other govern-ment fieldwork applications for heavy-duty laptops.
The exterior, which Dell dubs theBallistic Armor Protection System, fea-tures a material called PR-481. Dell
claims the case materials bring twicethe impact strength of magnesiumalloy, which is the major component ofthe Panasonic Toughbook cases.According to Dell, the E6400 can with-stand a drop of four feet when powereddown and closed and up to three feetwhen the system is open and operating.
While Panasonic has a big lead inmindshare in the rugged category, Dellis playing up the compatibility of itslaptops for government organizationsand companies that standardize onDell systems. “The fully rugged laptopshares common images and compo-nents with the Dell Latitude E6400laptops for easy integration into exist-ing environments, and enables lowownership costs,” Dell materials state.As Gartner Inc. analysts have said formore than a decade, there’s muchmore to cost of ownership than theprice of the initial system purchase.
—S.B.
RCPmag.com MAY 2009 Redmond Channel Partner 33
DELL LAPTOPS
Dell claims Latitude E6400 XFR’s case materials bring twice the impactstrength of magnesium alloy, which is themajor component of the PanasonicToughbook cases.
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APPTIX
APPTIX LOOKSTO CHANNELFOR GROWTHHosting company launchespartner program to sell hostedExchange, SharePoint andother products.
Apptix Inc., one of the biggerhosted Exchange providers, isramping up efforts to grow mar-ket share through the channel.
The Herndon, Va.-based com-pany has about 200,000Exchange subscribers worldwide.The company’s hosted servicesalso include voice and collabora-tion services for small and mid-size businesses.
Apptix has had a few large, pri-vate-label partners in the past inone-off deals that involved fairlylarge volume commitments anda stable of several hundredsmaller resellers, as well.
Company executives recentlyconcluded that further growthwill depend on a bigger andstronger reseller channel.
“The market becomes moreand more competitive every year.The products are becoming com-moditized. As a result, the cost ofacquisition is going up and theprice of the services is goingdown. The only way we can com-bat that is to be very friendly toresellers and be as supportive aswe can,” says Rick Rumbarger,vice president of product, whojoined Apptix in November.
Revamped PartnerProgramAn investment in a new partner-management platform is allow-ing the company to move from anold system that required a phonecall to get signed up as a partnerto a completely automated sys-tem that integrates multipleback-end functions.
“We spent 2008 getting readyfor the 2009 opportunity,”Rumbarger says of Apptix’sback-end changes. “The newplatform automates provision-
ing and brings a single control-panel experience for us, for thereseller and for the customer.It also consolidates the billingregardless of the product setthat you’re purchasing.”
That said, the white-labelcapability is a key element.While resellers can use theApptix storefront and credit-card billing system, they canuse their own branding on cus-tomer-facing consoles and theApptix name doesn’t show upon credit-card statements,Rumbarger explains.
Apptix expanded its formalpartner program in Februaryto support three standardizedlevels aside from the alliance-level deals with major private-label partners.
The Referral Program levelis for companies interested inacting as agents, and that getcommissions for referringclients to Apptix.
The next level is Reseller,which is for co-branded, out-of-the-box hosted servicesand includes white-label cus-tomer support provided byApptix. In December, Apptix soldoff its Indian operations andhired help-desk staff domesti-cally so it could offer 24x7 supportfrom within the United States.
Above Resellers are PowerResellers, which can offer anexpanded set of products andcan also manage their own net-works of Apptix resellers.
New Opportunities“We have less than 1,000resellers at this point. We gettens of thousands of seats fromthem. We’re interested in having10,000-plus resellers because wereally believe that’s the future ofour company,” Rumbarger says.“We’re putting a lot of resourcesbehind it.”
Rumbarger hopes resellerswill see new opportunities in theprogram, especially with smallcustomers with fewer than 500seats. “Maybe currently they cansell that customer a server for filesharing, but they couldn’t other-
wise get them onto Exchange,”he notes. “Now they can havetheir brand continue to be infront of that customer and cap-ture things like e-mail, which isone of the two stickiest prod-ucts that you can have in yourenvironment.”
The other stickiest product?Voice, Rumbarger says. Apptixisn’t offering its VoIP servicesthrough the Reseller or PowerReseller tiers yet because of chal-lenges related to detailed billingand federal taxes. “We’re activelyworking on getting Apptix Voiceand Desktop Voice into ourreseller channel,” he says. —S.B.
MICROSOFTREDEFINES‘ENTRY LEVEL’FOR WINDOWSSERVERRedmond releases OEM-only version called Windows
Server 2008 Foundation forcustomers with fewer than15 users.After years of positioningWindows Small Business Serveras the server entry point for itssmallest customers, Microsoft inApril launched an even morebasic version.
The new server is calledWindows Server 2008Foundation. The server is intend-ed for small businesses with 15 orfewer users. It’s available onlythrough OEMs as a pre-installedOS on a complete server.
Microsoft recommends thatthe server be used for core infra-structure, Active Directory-basedidentity management, TerminalServices or line-of-businessapplications.
“Microsoft has long beenmissing a product that’s posi-tioned at the low end, entry levelof the market,” says IDC analystAl Gillen, in a video commentaryposted on Microsoft’s WindowsServer Blog page. “The WindowsServer 2008 Foundation product
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0509rcp_RC_32-35.v4 4/14/09 3:33 PM Page 34
hits this opportunity square on andgives Microsoft another tool in itsarsenal to help provide a solution[that] is sized for just about everycustomer that needs a server.”
Unlike Small Business Server,the server does not come config-ured with an entire stack of applications, such as ExchangeServer. It also supports fewer usersin addition to being available onlyon pre-configured hardware.
Underserved MarketThe move into the lower end poten-tially opens up opportunities forpartners to help extremely smallbusinesses set up and monitor avanilla server.
“If I was a partner of Microsoftand I was looking at this particularproduct, I would see an opportunityto address customer needs at asegmentation of the audience thatpotentially I didn’t have a reallygood solution for. It’s an opportunityI couldn’t serve; it’s for customers
I couldn’t even reach before. It justgives me another tool in my arsenalto go address needs,” Gillen explains.
Licensing will be handled by useraccount. To make the costs work forsmall businesses, there won’t beWindows Server client accesslicenses (CALs). Companies thatchoose to use Windows Server2008 Foundation for TerminalServices will need Terminal ServicesCALs, Microsoft’s materials note.
AvailabilitySeveral major OEMs are alreadycommitted to building systemswith Windows Server 2008Foundation pre-installed. Dell Inc.,Hewlett-Packard Co. and IBM Corp.all plan to make machines available for purchase in the nextfew months, according toMicrosoft. Prices for the systems,including the OS, will be set by the manufacturers, and the costof the new Microsoft OS could vary by geography.
The operating system will ini-tially be available in English,Chinese (traditional and simpli-fied), Japanese, BrazilianPortuguese, Spanish and Turkish.More localizations will be releasedthroughout the year. Microsoftexpects the initial launch to reach40 countries.
The release of the server is evi-dence that Microsoft continues topush an “all of the above” answerto the question of on-premises ver-sus in the cloud. The addition of anew on-premises product forextremely small businesses comesat the same time Microsoft and theindustry are ramping up efforts toreach that key audience forSoftware plus Services andSoftware as a Service offerings,such as the Microsoft BusinessOnline Productivity Suite and other,more robust forms of HostedExchange and Hosted SharePoint.
—S.B.
RCPmag.com MAY 2009 Redmond Channel Partner 35
MICROSOFT
“Microsoft haslong been miss-
ing a productthat’s positioned
at the low end,entry level of the
market. TheWindows Server2008 Foundationproduct hits this
opportunitysquare on.”
Al Gillen, Analyst, IDC
“
”
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As the depth of the cur-rent recession continuesto grow, Microsoft’sdependence on its part-ners to bring innovationto market may mean
that a formerly valuable asset is becominga competitive liability.
At stake is a cornerstone ofMicrosoft’s Dynamics market strategy: Tobecome more competitive in the globalmarketplace with vertical and micro-vertical functionality that can augmentthe largely horizontal functionality thatDynamics AX, NAV and GP offer. With themarket clamoring for a portfolio of prod-ucts that supports the needs of customersin specific industries and geographies,Microsoft’s hopes of gaining share in themidmarket hinge on its ability to deliver amuch more specialized product lineworldwide.
At the center of that strategy are part-ners, on whom Microsoft is relying to con-vert industry and geographic expertiseinto packaged add-ons that extend thefunctionality of the Dynamics products.
Here’s the rub. In recessionary times,“do or die” spending patterns start to takeover as companies sacrifice for the longterm in order to stay in business. For manycompanies, this translates into cuts inresearch and development (R&D) spending. As R&D is usually budgeted as apercent of revenues in any company, the
decline in revenues that Dynamics as awhole has suffered—7 percent in thequarter leading up to the MicrosoftConvergence show in March—makes adecline in R&D spending almost a given.
These cutbacks won’t necessarilyimpact the core of the Dynamics line.Microsoft is spending billions on R&D,and a good portion of it on Dynamics. Butit’s easy to see that partners will have totrim their budgets both for R&D and formarketing new vertical solutions.
A downturn in partner marketingspending is something Microsoft canaddress through existing co-marketingprograms. But, as of Convergence, thecompany had no plans to help its partnerson the R&D side. Nor does it have an inter-est in taking a significant equity stake in itsvertical partners the way competitors likeSAP have been doing in recent years.
Which brings us to the competitiveproblem that Microsoft faces if there’s aslump in its partners’ ability to develop agrowing portfolio of vertical solutions.Microsoft’s two biggest competitors—particularly in driving innovation to themarket—have vastly different models forputting new vertical capabilities into theircustomers’ hands. And neither of thosemodels is facing as big a potential threatfrom the recession as Microsoft’s.
SAP, the clear leader in verticalexpertise, tends to depend on a combina-tion of internal development and partner
products for its industry-specific offer-ings. While its partner spending on inno-vation could also be under siege in therecession, SAP’s current model allows it tomaintain a significant amount of verticalinnovation in-house, as well as investdirectly in partners that need help inbringing products to market.
Oracle’s model is also largely recession-proof, as it relies on acquisitionto bring vertical solutions to market.While Oracle’s innovation model canmake life more complicated for cus-tomers that have to support the differentcode bases used by Oracle’s flagship E-Business Suite and its acquired products, the economic pressures in themarket make it possible for Oracle to buy a lot more vertical products for itsacquisition dollars than otherwise.
How this will sort out in the marketremains to be seen, but clearly Microsoftwill have to be careful to keep its verticalinnovation strategy on track or face adecline in its competitive profile. Whichwould, of course, impact the company’spartners as well.
It may be necessary for partners tobudget more than they’d like for verticalinnovation during the current recession.Failure to do so could prove to be a poorinvestment at a very critical time in theDynamics market. And critical mistakesare the kind that no one can afford tomake right now. •
Joshua Greenbaum ([email protected])is founder and principal of Berkeley, Calif.-based Enterprise Applications Consulting.
FORMORE ON THERECESSION AND THE MICROSOFTDYNAMICS CHANNEL,SEE THE COVERSTORY, “SHAPING ANEW IDENTITY”
RCPMAG.COM
Microsoft’s VerticalInnovation Strategy
38 Redmond Channel Partner MAY 2009 RCPmag.com
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In recessionary times, “do or die” spending patterns start to take over ascompanies sacrifice for the long term in order to stay in business.
0509rcp_Dynamics_38.v4 4/14/09 3:34 PM Page 38
AdvertisingSalesRedmond Channel Partner ✱ MAY 2009
AD INDEX
Advertiser Page URL
American Power Conversion 11 www.apcc.com
Cablesys 35 www.cablesys.com
Citrix 13 www.citrix.com
Dell C2, 1, 20, 21, C4 www.dell.com
Diskeeper 5 www.diskeeper.com
Microsoft Corporation 17 www.microsoft.com
Redmond Channel Partner 8 RCPmag.com
TechMentor Orlando 36, 37 TechMentor.com/orl/9
Zenith Infotech Ltd 2, 23, C3 www.zenithinfotech.com
EDITORIAL INDEX
Company Page URL
Acer Co. Ltd. 16 www.acer.com
Apple Inc. 32, 33 www.apple.com
Apptix Inc. 34 www.apptix.com
Comcast Corp. 30 www.comcast.com
Citrix Systems Inc. 10, 12 www.citrix.com
Datacore Software Corp. 27 www.datacore.com
dtSearch Corp. 26, 27 www.dtsearch.com
Dell Inc. 16, 32, 33, 35 www.dell.com
Evolve Technologies 22 www.evolvetech.com
GroupSPARK 31 www.groupspark.com
Heartland Technology Group 16, 22 www.heartlandtechnologies.com
Hewlett-Packard Co. 16, 35 www.hp.com
IBM Corp. 35 www.ibm.com
Idera 26 www.idera.com
JNBridge LLC 28 www.jnbridge.com
K2 25 www.k2.com
Lenovo 16 www.lenovo.com
Lieberman Software Corp. 28 www.liebsoft.com
Marathon Technologies Corp. 27 www.marathontechnologies.com
MVP Systems Software Inc. 26 www.mvpsi.com
Novell Inc. 9, 10 www.novell.com
Optimize Now Technologies LLC 16, 22 optimizenow.com
PCMS IT Advsior Group 18 www.pcmsdatafit.com
Raxco Software Inc. 25 www.perfectdisk.com
Red Gate Software Ltd. 26 www.red-gate.com
Revenue Rocket Consulting Group 19 www.revenuerocket.com
Sanbolic Inc. 27 www.sanbolic.com
Sapien Technologies Inc. 26 www.sapien.com
ScriptLogic Corp. 27 www.scriptlogic.com
Sherpa Software 28 www.sherpasoftware.com
Special Operations Software 26 www.specopssoft.com
TalentFamily Inc. 16 www.talentfamily.com
USA.NET 31 www.usa.net
VMware Inc. 10, 12, 28 www.vmware.com
RCPResources
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0509rcp_Index_39.v1 4/14/09 4:20 PM Page 39
VISIT RCPMAG.COMFOR DEGROOT’STAKE ON HOW TO HANDLE MARKETING IN ATOUGH ECONOMICENVIRONMENT
Microsoft has a bigproblem. Sales inthe enterprisespace appear to befaltering as big cus-tomers collapse,
go bankrupt or simply cut back. So wheredoes Microsoft go for growth?
The core and upper midmarket, fromabout 100 to 750 computers, is the currentsweet spot. One reason: Penetration of thebig, expensive and profitable EnterpriseAgreements (EAs) among big customershas hit the saturation point at about 70 per-cent of the worldwide enterprise market,but only about 12 percent of those midmar-ket customers have such agreements.
The approach Microsoft is takingcould profoundly change the partnerchannel in the midmarket. For smallerpartners, it could be a boon; for largerpartners, such as LARs, not so much. Twodevelopments signal this change.
First, Microsoft has moved the LARs’cheese. They collect fees for helpingMicrosoft sell and manage EAs. One of thebiggest pots of money is for SoftwareAssurance (SA) benefits activation: get-ting customers to actually use those bene-fits, big orsmall, that come with SA.Microsoft has found that customers whouse at least three of these benefits are
more likely to renew their EAs. Anothermajor pot for LARs is selling additionalproducts and new agreements.
Starting May 1, Microsoft haschanged the fees. In particular, the SA ben-efits fees are cut 70 percent to 85 percent.The fees for selling additional products goup 2 percent, and the fees for new EAs go up2 percent as well—except for new agree-ments for customers with more than 6,000seats, which don’t change.
This is bad news for LARs who dealwith the largest customers. A majorsource of revenue—the SA benefits acti-vation fee—will all but disappear, and thecompensating increases for additionalproducts and new EAs have never beenmore difficult to earn.
Second, Microsoft is siccing a wholenew set of partners on that very same mid-market space. A new licensing initiative,officially called Open Value Level C, createsa new discount tier in the Open Value pro-gram, which is much like an EA for smallcompanies. Like an EA, you pay an annualfee for each computer in your company,and you license common Microsoft soft-ware and CALs for each computer.
Open Value has been in the market formore than five years, but it never appealedto companies with more than 250 PCs,because at that point they could get much
better discounts by purchasing through theSelect or EA programs—both of which areonly accessible through a LAR. With OpenValue, a smaller VAR who had done all thelicensing sales for a small customer mightbe deserted for a LAR once the customer hitthe magic 250-PC mark.
That’s about to change, becauseMicrosoft has made prices in the new dis-count tier, Level C, virtually identical topricing for an EA.
This is a big deal. It opens upper-midmarket licensing sales to thousands ofVARs, who can offer their customers EA-like pricing without having to call on aLAR. That means smaller partners canhold on to their customers—and the serv-ices, deployment and maintenance busi-ness that they generate—much longer.LARs, on the other hand, will be squeezed.
While that may prove advantageousto VARs, it poses some potential problems.
VARs, who make their money from ITservices rather than software sales, mayfind that the complexities of licensing fortheir customers magnify quickly as theircustomers’ solutions and business modelsget more complex. That’s where a goodLAR really helps.
So while VARs can start salivatingabout the significant opportunity they’ll getwith Level C in the midmarket, it will begood to keep a LAR as a friend, for the dayswhen they need a little help from one. •
Paul DeGroot ([email protected]) is a senior analyst withDirections on Microsoft, a Kirkland,Wash.-based independent research firmfocused exclusively on Microsoft strategiesand technology.
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A major source of revenue—the SA benefits activation fee—will all but disappear, and the compensating increasesfor additional products and new EAs havenever been more difficult to earn.
B Y P A U L D E G R O O T
RCPMAG.COM
Next Month: Licensing Discount Madness
Big Cheese in Small Markets
0509rcp_Directions_40.v4 4/14/09 3:35 PM Page 40
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With no upfront fees or license purchases, ZenithInfotech lets you offer and implement a comprehensive Backup Disaster Recovery (BDR)program in days, not months. And as a ZenithInfotech partner, you enjoy such benefits as:
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