"That's our space, that's our house," he said, rallying the troops responsible for 96 percent of the company's revenue. "They're not going to take food off our plate."

And others, including IBM, Oracle, and Linux vendors Novell and Red Hat, should expect greater competition from Microsoft for market share in 2007, Turner said, prodding the Microsoft channel to take their customers.

"Let's get rid of all the NT out there, all the [IBM's Lotus] Notes, all of Novell," he said.

Sales will be more of a focus for Microsoft in fiscal year 2007 (which began July 1) than in previous years, he indicated. Turner, who until 2005 was CIO at Wal-Mart, based in Bentonville, Ark., painted a picture for partners of an organization driven by winning customers and customer satisfaction.

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Microsoft has redesigned its review and compensation structure for in-house sales personnel to put more focus on partners, he said. All salespeople will now be evaluated in terms of partner satisfaction (one of 27 factors all sales personnel will be judged on to determine their reward and compensation packages) and by 2007, partners should be judged on customer satisfaction, he said.

Enterprise search presents a foothold for Microsoft partners. Click here to read more.

Turner also promised a clearer picture for partners regarding Microsoft's long-term strategy and goals, especially in areas such as Dynamics and Microsoft Live, where partners are often confused about where they belong. Field sales personnel will be given the goal of articulating Microsoft's product road map to partners.

The Redmond, Wash., company is in the middle of a year of technology releases unprecedented in the company's history. From SQL Server, released in the fall of 2005, to Windows Vista (scheduled for release in early 2007), Office 2007 (late 2006) and Longhorn Server (fall 2007), the company has more products to move than ever before and new opportunities in areas such as business solutions involving the Dynamics business software.

The new products also mean new business opportunities for Microsoft in areas such as enterprise search, ERP (enterprise resource planning) and CRM (customer relationship management) where Microsoft has had very little presence until now, and where it faces competitors such as Oracle and SAP.

"We invest and we make stuff, to sell stuff," Turner said. "We're telling our field sellers, 'This is the time we take the vision, the investment and turn it into reality and revenue. Partners will have to step up and drive as hard as we can to grow share, take care of customers, get into new markets and opportunities."

"This is not a five, 10, 15-year plan," Turner told the gathered partners. "This is what we plan to win together in FY '07."

Microsoft revs its SMB engines for a product push amid new releases of Windows Vista, Office 2007, "Longhorn" Server and SQL Server. Read more here.

Reinvent and disinvent

Turner reassured the partners, many concerned about Microsoft's product strategy, especially in the Live and on-demand space, that the channel remains the company's priority, but said partners would inevitably need to change the way they do business.

"We will continue to promote a profitable business market for you," he said. "But that doesn't mean you won't have to change and dial your operation appropriately. You must change as fast inside your organization as the world is changing outside to compete. You have to keep wanting to change, to reinvent. You have to have the courage to disinvent what was successful in past. We had to disinvent something to create what we're doing in Live."

Microsoft spent part of the week encouraging partners to envision a very different business environment to capitalize on the on-demand and Live technology platforms. The new models would have VARs compensated by subscription- and ad-funded streams in addition to reselling commissions, margins, hosting services and customization.

Microsoft attempted to reassure its partners that there was still a place for them in the on-demand world. "[Office Live] is not a solution without partners; we need that value-add," said Brad Wilson, general manager of Microsoft's CRM group. "It's not out of the box, whether it's on-premise or partner-hosted, or Microsoft-hosted. It's the exact same partner model. The partner made the screen come alive for the user."