As Microsoft Aspires to Apple Model, Channel Changes

Microsoft partners face a fork in the road ripped any illusions that it doesn’t want to replicate Apple’s integrated-stack device model by finally acquiring ’s handset business for $7 billion. What now concerned Microsoft’s sprawling channel partner network is Microsoft will copy Apple’s apathetic and often hostile channel philosophy.

In adding Nokia’s handset business to the mix, solution providers see Microsoft shifting away from its channel roots and embracing Apple’s model in which low margins and high restrictions are shoved onto partners.

For its part, Microsoft assert a commitment to the channel. Newly appointed channel chief called the channel Microsoft’s greatest weapon.

“Our partner ecosystem is one of our greatest differentiators in the market, and I could not be more excited about the role of the [Worldwide Partner Group] organization in helping foster the development and growth of this ecosystem. It’s really simple: We cannot fulfill our vision of being a devices and services company without the help of our broad partner base,” he said in a corporate Q&A.

Thus far, solution providers aren’t feeling Microsoft’s love. In the recent Report by The 2112 Group, Microsoft ranked second only to Dell among solution providers for poor management. And partners point to Surface, which remains mostly outside the channel’s reach, as evidence of Microsoft shifting away from channel commitments.

The Surface tablet isn’t the only place where partners see rising conflict. Many solution providers complain that Microsoft’s services pricing and low margin strategy makes it difficult for them to capitalize on product such as .

Perhaps the biggest sin Microsoft is committing in the eyes of the channel is not listening to partner grievances. This isn’t to say that partners are always right in their complaints. However, solution providers say Microsoft acts like an aging monarch in ignoring their protests and not considering their requests.

Whether Microsoft truly wants to replicate Apple’s model isn’t totally clear. Microsoft’s device and services strategy, as well as its “One Microsoft” reorganization, is designed to put Microsoft at the forefront of customer considerations and purchases. Microsoft is increasingly offering more products direct, particularly to consumers and small businesses. More complex products, such as its business tools including Dynamics and System Center, remain in the purview of the channel.

Solution providers’ skepticism about Microsoft’s future strategy are founded. Attempting to keep Microsoft from direct sales may not be the right strategy for the channel.

Rather than griping about Microsoft becoming an Apple clone, solution providers may want to look at their own evolution. If Microsoft is adapting to a new world order in which product sales are centralized, controlled and direct, solution providers should look to change their models and engagements to match.

Rather than complaining about Microsoft strategies and product margin structures, solution providers should do what many have done around Apple and conceived of models that capitalize on directly sold products with value-add services and support.

The channel is replete with examples of solution providers taking advantage of Apple’s popular products without actually engaging Apple.

  • eGroup, a South Carolina-based mainframe solution provider, made a practice around integrating iPads with and mainframe platforms to make legacy applications accessible on the portable devices.
  • AccuCode, a Colorado-based solution provider, is providing to retailers who adopt Apple products as point of sales portable devices.
  • Blacktip, a Florida-based managed , specializes in providing remote monitoring and management services to businesses standardized on Apple devices.

There are many more examples of Microsoft partners using their value-add and capabilities to build thriving business practices around Microsoft devices and services. Arguably one of the best examples is Champion Solution Group, which develop its 365 Command spinoff, to help other solution providers better manage Office 365.

While the modern high-tech industry is nearly 50 years old, it remains relatively immature compared to other verticals such as automotive and retail. Technology vendors are being forced to change their strategies and models to match contemporary and emerging trends. Solution providers will need to do the same. What’s changing is solution providers cannot expect the vendors to continue to lead the way to their success. Solution providers’ futures are increasingly in their own hands.

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