Microsoft Inspire: Understanding the Importance of Partners

Microsoft Inspire is Microsoft’s major annual partner event, and it is a partner love fest. But what is particularly interesting is the sharp contrast it offers with Apple and Google, both accused of anti-competitive practices while mining their partners for money.

Interestingly, going back a couple of decades, Microsoft had a massive internal struggle about whether to rely on partners or spin up an IBM-like services organization that could make many partners obsolete. The decision came down to rely on partners, driven by Steve Ballmer, and history has proven that position to be correct.

Inspire once again showcases that Microsoft gets how leverage works. Having a robust partner ecosystem where the focus is on ensuring partner success is highly profitable for Microsoft strategically. Let’s talk about why Microsoft’s approach to partners is better than Apple’s and Google’s.

Partner Focus

All partners are not created equal. Back when I was doing surveys on the significant enterprise vendors, I found that those that used partners heavily had lower customer satisfaction than companies that didn’t. This result was because, back then, it was almost impossible to control the quality of any engagement through a partner. On the other hand, companies that used a partner network could grow faster, generate more revenue, and more effectively dominate a segment.

Since that time, things have changed a lot. A better partner matrix allows for identifying underperforming partners, allowing the company to mitigate the problem with partner-focused resources or terminate the partner if the behavior can’t be corrected. Technology enables tighter partner integration, and Microsoft provides extensive tools for partners to perform better and become more profitable.

A lot of what Microsoft brings to the table is decades of partner love, and that was clear in the keynote, where partner after partner were called out for their above-average performance. CEO Satya Nadella articulated his strategy of assuring partner success to assure Microsoft’s.

Apple and Google

Both Apple and Google are somewhat infamous for treating partners as a necessary evil they have to put up with rather than a critical part of their team. Feedback from partners is often given lip service; partners are constantly surprised with updates and changes they should have at least been notified in advance about, if not consulted before they were implemented. They often complain of a lack of transparency.

One of the most significant new differences is in the various app stores, where the default charge is 30%. These firms also often want a percentage of what is sold in the partner’s store even though there is no apparent value connected to this charge. Apple and Google appear to charge because they can and because developer partners have to use the respective app stores to get to the Apple and Google platforms. Google is experiencing a massive level of litigation from 36 States, while both the EU and the U.S. are hitting Apple on their app store practices.

These practices look particularly onerous against Microsoft’s 3% App store charge and the promise to leave in-app purchases alone so the partner developer can make the most from their work. I can recall when, in antitrust events, Microsoft was the bad guy and Google appeared as the White Night; this round, the two companies have switched positions. This disparity is not something I expect will play well for either Apple or Google long term. But it showcases Microsoft is thinking strategically and anticipating the EU and the U.S. issuing orders requiring multiple app stores on every platform. If that happens, Microsoft’s app store, with its far lower pricing and better history of caring for partner developers, could cut through both Apple and Google app store revenues like a hot knife through butter.

Further reading: The Key to Channel Growth: Working with Vendors to Create New Services

Microsoft Gets It

At Inspire this year, Microsoft again showcased that they get the importance of partners. Nadella praised large groups of partners throughout his keynote, and Microsoft’s shift to Azure Cloud and Windows 365 are both efforts that should please these partners greatly. Unlike Google and Apple, particularly with their excessively high app store charges, Microsoft looks like the good guy this time. And if, as I expect, the EU or the U.S. rules that Apple and Google must allow competition for app stores, Microsoft is positioned to be the biggest beneficiary of such a move, showcasing an impressively strategic approach to the issue.

In the end, partners are critical to the future of any company that uses that channel and should be treated as such. Microsoft has institutionalized a deep commitment to partners over decades, which was on stage this year at Inspire and should assure significant upside during what is likely to be a time of massive technology-driven change.