July 10, 2007 9:23 AM PDT

Microsoft to partners: It's time to change

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July 10, 2007
DENVER--Aiming to rally its partners around the reality of hosted software, Microsoft Chief Operating Officer Kevin Turner told them it was a matter of financial life and death.

"We have to change faster internally than the world is changing externally or we will be obsolete," Turner said, as part of his speech, which kicked off Microsoft's Worldwide Partner Conference here.

While change is hard, Turner said Microsoft's partners need to be ready to offer customers the choice of running software on their own servers or subscribing to hosted services. "It doesn't mean locally based software is going away, but customers want the choice."

Microsoft is trying to keep its partners in the fold through the transition. With its new Live CRM service, set to go on sale next year, Microsoft is offering partners a 10 percent cut of ongoing subscription revenue for partners that help sell and support the product, for example. He also noted that an early access program for Live CRM, which kicks off this quarter, is only available through partners.

But the shift also opens the door to more conflict for the company and its partners. Turner talked about how, as software shifts, Microsoft will find itself both partnering with and competing against companies like SAP and Cisco.

Indeed, Microsoft may also find itself competing with its partners in the hosted software arena. While the company is pushing for its partners to help sell its hosted products, Turner acknowledged that some customers may want Microsoft and not partners to do the hosting, a task many partners offer today.

Turner also talked up the new opportunities that will be created by Microsoft services, pointing to the company's Office Live service for small businesses. Turner announced a new program that will allow partners to create add-on applets that Microsoft will host. He said that Office Live, which currently has 400,000 businesses signed up, has the potential to become one of the three or four most-used Microsoft products.

"There are millions and millions of small businesses we can reach," Turner said.

Earlier in his keynote, Turner touted the potential for the company and its partners to profit from the Office 2007 and Windows Vista products that Microsoft launched in its past fiscal year. During that year, some $20 billion in research and development investment came to market, he said.

"I see one thing in fiscal year (2008)," he said. "I see money...I can smell it. I can hear it. This is the year we are going to monetize that innovation."

Turner also announced that Microsoft's new server operating system, Windows Server 2008, won't have its formal launch until next year. Microsoft plans to launch that product, as well as the next version of its SQL Server database and Visual Studio developer tools at an event on February 27 in Los Angeles.

See more CNET content tagged:
Microsoft Office Live, CRM, Microsoft SQL Server, Microsoft Corp., small business

17 comments

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"will be obsolete"?
They already are.
Posted by qwerty75 (1164 comments )
Reply Link Flag
Micro$oft Agonistes
Another attempt by M$ to avoid becoming irrelevant. Our shop has already been approached about the "dire consequences" of not buying into the hosted model. Our customers laughed us out of the room when we presented the idea at our last users group. Probably will pass on this one.
Posted by a155mm (7 comments )
Link Flag
Like they were 10 years ago?
Are they just as obsolete as they were back in the mid to late 90s when the OSS crowd claimed that MS was ALREADY dead, but just wouldn't realize it until 2001 or so? (Win98 was the last version that would sell any large numbr of copies, IIRC.)

I'm sure the claim will be the same next decade...

C/ZDnet, always good for a larf...
Posted by KTLA_knew (385 comments )
Link Flag
They can smell the money!
Ha! Thanks to their own efforts that have taken money out of my pocket in exchange for nothing. I will avoid using MS wherever possible becaues if they are going to get off on smelling money, it's not going to be much of mine. Given time I can shift that "not much" to none whatsoever.

If MS focused on the customer instead of the money they would not be digging such a big hole for themselves.
Posted by Renegade Knight (13748 comments )
Reply Link Flag
Re: They can smell the money!
Well, they're in business to make money. But I have to say, if this really took off, I'd be a bit shocked.

Charles R. Whealton
Charles Whealton @ pleasedontspam.com
Posted by chuck_whealton (521 comments )
Link Flag
Microsoft has a long history of reinventing itself
Get over it.
Posted by WJeansonne (480 comments )
Reply Link Flag
You are absolutely correct
Microsoft is constantly "reinventing themselves".

Historically it seems when someone else comes up with a good idea, Microsoft uses their storehouse of money to either buy the innovating company or produce their own, normally inferior version.

And most people still think buying the Microsoft version is a good idea. But that group of people has been shrinking for years.

Cellphones? Wince phones are still a small percentage of the market. Online services? It's Google, then everyone else. Music players? I live in a large city and spotted a Zune for the first time two weeks ago.

But the XBox does/did have good market share. Too bad it's never made Microsoft a dollar. And now MS has announced a potential $1 Billion dollar liability due to problems with the unit.

I think the analysts are right when they say to Microsoft:

"Give up trying to be cool. It's not working."


<a class="jive-link-external" href="http://www.informationweek.com/news/showArticle.jhtml?articleID=201000608&#38;subSection=All+Stories" target="_newWindow">http://www.informationweek.com/news/showArticle.jhtml?articleID=201000608&#38;subSection=All+Stories</a>

<a class="jive-link-external" href="http://www.sltrib.com/business/ci_6345245" target="_newWindow">http://www.sltrib.com/business/ci_6345245</a>
Posted by rcrusoe (1305 comments )
Link Flag
Yes but...
Yes but they also break the law in order to catch up. If they can't break the law this time round, then they might find it a lot harder to compete.

The harder it will be to compete the more reason for them to say #$%^ it, let's break the law again.
Posted by t8 (3716 comments )
Link Flag
As a Microsoft partner..
At this time point I do not use a single MS product that was released in the past five years:
Vista - No. Office 2007 - No. Visual Studio .Net - No.

Now, if Microsoft relies on me to push their new products and make money, they have seriuos problem !
Posted by bar86 (26 comments )
Reply Link Flag
What kind of change?
I think the change is already coming, not from Microsoft but from users who are moving from traditional offline operating systems and applications to the web (Web mail, Web photo albums, Web documents?etc) where all data and applications are available from anywhere.

Check out G.ho.st (The Global Hosted Operating SysTem) at <a class="jive-link-external" href="http://g.ho.st" target="_newWindow">http://g.ho.st</a>. G.ho.st is working to provide a free fully functional Virtual Computer, on the Web, so that every person in the world can do any computing at any time, any place, on any budget.
Posted by Ramicnet (4 comments )
Reply Link Flag
I am a bit confused...
but help me please to understand. Does all this mean (doing all things on the Web) that we trust all of our Data to some one else to safe keep. What I believe it means to let a company such as Microsoft protect all of our money and data on their own servers? If that is what it all means, then I do find all of this scary. I believe it to be wise for a company to have their own servers and protect their own data. People really should (and won't) learn from the mistakes made through history and stop putting FAITH in other people and their organizations to protect what they have. I really have to admit I do not understand everything about this, but I feel I do believe and understand enough to see that there is something really wrong with all of this. It all seems to be about someone controlling everything. If that is what it is, then NO THANK YOU!
Posted by Ted Miller (305 comments )
Reply Link Flag
SplendidCRM offers free hosting license
We believe that Microsoft will have a hard time attracting partners for its Live CRM when there are so many alternatives that offer much better deals for partners.
Posted by splendidcrm (25 comments )
Reply Link Flag
Partners to Microsoft: "You First"
Seriously - between overly-restrictive EULAs, DRM, incredibly
stupid licensing requirements, and the basic premise that MSFT
thinks it can merely dictate and the developers will somehow
follow.

Let me put it in very clear terms:

"Hey, Steve! it's not 1998 anymore! You're losing mindshare
faster than a drunken sailor loses money on Shore Leave! Vista
is sucking harder than a galaxy-swallowing supermassive black
hole! Nobody wants to shell out a pile of Benjamins on warmed-
over reheated bloatware like Office 2007! Get a frickin' clue
already!"

If MSFT requires any more clarity, I'd have to hit Maya and make
an animation of it.

/P
Posted by Penguinisto (5042 comments )
Reply Link Flag
Good one
"Vista is sucking harder than a galaxy-swallowing supermassive black hole!"

Priceless- I'll have to remember that one.

Cheers
Posted by hounddoglgs (74 comments )
Link Flag
Change to a Mac
You'll be so much happier, and you'll be ahead of the curve instead of behind it all the time.
Posted by Xenu7-214951314497503184010868 (153 comments )
Reply Link Flag
It is time to change to OS/2
better than a Mac, more stable than Windows, and virus-proof and hacker-proof!
Posted by Thought Police OMalley (16 comments )
Reply Link Flag
 

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