With Partners Like Microsoft, Who Needs Enemies?

Take, for example, Microsoft's plans to continue to expand its specialized, vertical-solutions direct sales force. Simon Witts, corporate vice president of Microsoft's enterprise and partner group, said that this won't cause any business conflict with its partners.

Mind you, Witts said that Microsoft is moving the selling of services into its sales force under a program known as "One Microsoft," in which there is one account team and one opportunity pipeline.

Nevertheless, Witts insisted that Microsoft is not in the services business and doesn't have ay plans to become a services player

"We still run that as a cost center, and it doesn't even break even. I bill $1.6 billion of services in the enterprise, and so it is always going to be less than 10 percent of my revenue and less than 5 percent of my server sales," Witts said.

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Excuse me, maybe 1.6 billion ducats is pocket change for Microsoft, but it's big bucks for anyone who's south of a $100 million annual gross revenue. It's more green than most of Microsoft's partners see in a year.

OK, maybe it's a cost center now, but Microsoft is still pouring more money and resources into it. In the last five years, Microsoft has increased its enterprise sales force by 60 percent. And, Witts said, "I think we could grow it another 60 percent in the next five years. We have also been growing our on-site services team by 16 percent compound annually, and we will continue to do that, so we can get to 23,000 people inside the enterprise in the next five years."

But, wait there's more. The number of specialists in the enterprise sales force is also likely to double to 50 percent, according to Witts.

Click here to read more on Microsoft and its channel practices.

And what's a "specialist"? This "specialist" designation does not just mean that the on-site Microsofties know all about the individual technology sets, but increasingly that they understand things like straight-through processing, claims, point-of-sale and branch. "This is very much what I would call cross-workload or industry solutions," Witts told eWEEK reporter Peter Galli.

Enough is enough. Microsoft is getting ready to compete in the channel with its partners. End of equivocation.

Microsoft is new at selling services, so it may yet fumble this new effort. But even if it does, Microsoft's partners are going to feel the pressure.

Microsoft is already saying that it's no longer choosing partners based on their commitment to Microsoft products. The new gold standard is whether partners have vertical expertise.

At the same time, though, that's the same area that Microsoft is boosting its direct sales force. Ack!

From where I sit, the Microsoft solution plan looks like trouble whether you're a traditional value-added reseller or an integrator who installs and maintains Microsoft Office and server software or a higher-end verticals service provider.

When you consider Microsoft's great-white-shark tactic for dealing with competition in the software business, Microsoft partners should be worried, really worried.

Microsoft can say all it wants that these changes aren't really going to hurt partners. All I can say is: Don't listen to what it says, look at what it does. Then you tell me if your future as a Microsoft partner looks rosy.

eWEEK.com Senior Editor Steven J. Vaughan-Nichols has been using and writing about operating systems since the late '80s and thinks he may just have learned something about them along the way.