IBM and Microsoft have found themselves on opposite sides of the fence as often as they have found themselves on the same side as partners. With the OS2 v. Windows battle well behind us—though not forgotten, it seems that IBM is taking on Microsoft once again. This time it’s a contest for hearts and minds in two of Microsoft’s strongest arenas—the ranks of independent software developers (ISVs) and integrators and resellers who service the small to mid-sized business (SMB) market.
To those of us who report on the channel, this is shaping up as a much more interesting contest than the operating system war. Although, at the surface, it seems the struggle is once again over operating systems, what’s really at stake is dominance of the large, lucrative, and still relatively untapped SMB market.
In the IT market, small business hardly means small change. Recent changes in tax law changes allow SMBs to deduct as much as $100,000 annually in fixed capital expenditures from taxable earnings. Consider that AMI Research in New York estimates there are as many as 7.6 million SMBs in the United States and you’ve got a huge pool of cash that’s ripe for IT spending. For the most part, these are not companies that have tightened budgets to curb IT spending. that laid out millions for data centers in the 1990s. Many have been slow to embrace integrations even if they believe they’ll be more productive. They’ve delayed spending. (How many do you know who still use Windows 98?) For others, IT spending still means desktop systems and the applications that run on them.
IBM has begun to move its big-enterprise focus downstream to the partners, developers and integrators who serve these smaller customers. That’s a territory that traditionally has dominated by Microsoft, the company the produces the desktop applications small business is so familiar with.
Courting the local reseller
It’s little wonder that IBM, in attempting to reach the SMB market, has taken its case to the channel. Small businesses have never been early adopters. They’ve traditionally outsourced IT chores to trusted local integrators and service providers.
Recognizing the marketing strength of that group, Microsoft has redefined its partner relationships in recent years to embrace even the smallest resellers who come to its web site. Among other services, it offers localized training and support services to help them carry the company’s products and marketing messages to their small business clients.
Seminars held throughout the country play no small part in the strategy. I call it Redmond’s own twist on the bringing the mountain to Mohammed theme. If partners can’t come to Redmond to get the training and support services, take the training and services to the partners. It’s not that IBM and others do not provide similar opportunities for their partners, it’s that Microsoft has it down to an art form.
Not long ago, I peeked in on one of these local sessions when trainer Neal Wadhwani brought the Microsoft roadshow into my northern New Jersey neighborhood. For most of the VARs who attended, it was no more than a 30-minute drive away (I literally walked). Several hundred resellers from around New York City and the Garden State, gathered for half-day TS2 sessions that offered everything from training on the company’s development platform to sales and marketing support and resale promotions on Microsoft products. (See my interview with Patrick Hayes, Microsoft’s general manager of seminars for more on TS2).
The idea, Wadhwani told me, is a simple and friendly one: Help the people who help the clients. They represent a powerful extended marketing force. This isn’t a costly certification course that only the largest partners can afford. Microsoft tailors TS2 to smaller resellers and gives them no reason not to attend. The sessions are local, short but intense. And free.
IBM has already upped the ante for partners by increasing the incentives to migrate Windows clients to its Linux platform.and pumping $1 billion into programs. But we suspect that’s just one of many moves to come in Big Blue’s forward advance strategy. Certainly, more is needed if the folks in Armonk really expect to pierce the SMB market. In seeking to get to the next level, IBM might do well to take a cue from the very company it’s competing with.