Microsoft Walks Tightrope Across Channel

By Sara Driscoll  |  Print this article Print

As the software giant launches SharePoint and Exchange as online services, many VARs and industry watchers are fearful for the channel.

Microsoft is skating on thin ice across the channel today after the vendor revealed it will offer its SharePoint and Exchange as hosted services to small businesses.

Microsoft Chairman Steve Ballmer announced at the CeBIT conference in Germany today that the software giant intends to offer both applications as online services to small businesses – previously something it only offered to large enterprises. By offering the services online to SMBs, VARs fear that end-users will go direct and therefore bypass the channel.

Mike Healey, CTO at Microsoft Gold Partner, GreenPages technology Solutions, said it was an interesting and reactive move by Microsoft. "[Microsoft] is reacting to the interest in the software-as-a-service market at the moment. But whether SMBs are going to be willing to make the leap onto both Exchange and SharePoint as hosted I am not so sure."

GreenPages already offers its clients some hosted applications, anti-spam and saleforce, for example. "For us this won’t change a great deal and it gives us another option to offer customers," he said.

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However, Healey said it could cause "some stress" for Microsoft’s more traditional channel that is not yet offering hosted services. "Microsoft is doing this as a reaction to Google and it is a valid concern that partners may be wondering if Microsoft will go direct with this strategy." Healey said Microsoft’s real challenge that Google doesn’t have is that it is so highly dependent on the channel that it has to walk a very fine line. 

Dale Vile, senior analyst at Freeform Dynamics, agreed. He said Microsoft needs to be very clear about who it is targeting with its hosted offerings. "The last thing Microsoft needs is to undermine its channel. So it needs to be clever and be clear in exactly where partners can add value and be careful that it does not undermine what the channel offers."

Vile said, however, that the channel is able to offer things that Microsoft can’t to SMBs. "Small businesses need enhanced support – like a surrogate IT department – and Microsoft cannot offer this itself. VARs can also offer configuration and low-end application development around this, so it can add value in that way."

Alan Weinberger, chairman and CEO of the ASCII Group, a VAR buying group with more than 5,000 members worldwide, said some VARs could see this as a threat. "If Microsoft does take this direct and doesn’t then offer a fee for resellers who consult or implement, then it could make an enemy of the channel," he said.

He said the ASCII Group has already started to work with Google around its online applications. "But whoever turns out to be most channel–friendly and offer rebates or a referral fee is the one the channel will support," he said. "Google might have more simple technology – not everyone needs the bells and whistles that Microsoft offers – however, Microsoft is more channel-friendly right now."

Sara Driscoll began her journalism career at 16 years old on her local newspaper, The Watford Observer. Working part time, she covered a range of beats. Leaving to complete her Journalism Degree at Bournemouth University, UK, Sara then went on to graduate and work for Emap. She began as a reporter on APR, Emap's construction title, being promoted to senior reporter with a year.Sara then joined VNU Business Publications as Deputy News Editor on CRN, the weekly trade title for channel players. She covered industry/business news from vendors, distributors and resellers, product announcements, partner announcements as well as market and trend analysis, research and in depth articles to predict up and coming trends in the sector. She was promoted within a year to News Editor, a year later to Deputy Editor and the following year became Editor. Sara remained editor of CRN for three years, launching the magazine on new platforms including CRN TV and eBooks, as well as several magazine and web site redesigns. She was called on for expert industry comment from various publications including appearing on live BBC news programs. Sara joined Ziff Davis Enterprise as Editor of eWeek Channel Insider. She runs the title in all formats – online up to the minute news, newsletters, emails alerts and events. She also manages the brand of Channel Insider in all formats - events, shows, awards, panel debates and roundtables.Sara can be reached at:sara.driscoll@ziffdavisenterprise.com