Microsoft looks towards 2009 and beyond for the channel

CRN: What advice do you have for partners in the current climate?

Tracey Fellows: I think as an industry we are much more sophisticated than in the heady days of the dotcom boom when there was an expectation and customers would just invest because you kind of should versus looking at a return of investment.

Our industry is sophisticated, our customers and partners are more sophisticated, too. Information technology underpins every business now.

It’s not this thing on the side, businesses are pragmatic about the need to continue to invest in their infrastructure – it’s what keeps them going and gives them a competitive advantage.

It’s not an option to just turn it off.

Resellers are recognising that customers need a more immediate return or benefit from a product.

Whether its infrastructure optimisation, business intelligence or Unified Communications, we feel very comfortable that we have technology solutions that require modest investment from customers for a very real payback in a short period of time. We don’t feel nervous.

For the channel it is about helping take that message to market. You have got to change how you talk to your customers.

It’s a different market out there than it was. At the end of the day the channel runs their businesses and they have to make decisions.

We are spending a lot of time with the channel.

We only succeed if they succeed. We are spending a lot more time front-and-centre talking to the channel.

The message is spend time out with your customer and understand what matters to them. What matters to our customers now is a greater degree of immediacy and that is what has changed.

CRN: Microsoft is going to discontinue its OneCare offering and replace it with a free offering next year (codenamed Morro).

Is there a reseller backlash against this as their sales will be impacted as a result?

TF: I’d be surprised if there is a reseller backlash against the free offering next year.

OneCare as a product has a relatively low percentage market share. I’d be surprised if any resellers were heavily concerned.

OneCare was a broader product and in the new version it’s a narrower scope of the product, creating a free offering, but it was a strategic decision.

OneCare is a very, very, very small revenue item so I can’t think of a single reseller who would have any significant portion of their business on OneCare.
We are giving a lot of warning and notice on this.

I think retailers will be the ones, because they stock it on their shelves, we are giving them quarters and quarters of notice to manage that transition, so we are not trying to keep it as a surprise to anybody. I think in terms of financial impact, it would be very modest indeed.

CRN: Resellers claim Vista is ‘dead in the water’ with the launch of Windows 7. Are you giving up on Vista?

TF: No, Vista is not ‘dead in the water’.

We have a significant amount of enterprise customers rolling out Vista, we certainly see this in a large number of PC sales, all of those PCs are running Vista.

As we look at customers today who are planning their desktop refresh strategy, they are still testing whether to transition their environment onto Vista.

As they begin to roll out [the refresh], they will make a decision whether to run that on Vista, or depending on the release timeframe of Windows 7, to run it on Windows 7.

Customers are moving more towards how do they have a more managed desktop, how do they drive down that infrastructure cost, and how do they maintain a secure environment, and Vista still delivers all of that for them.

When Windows 7 comes up that becomes the new operating system for a period of time. We will have two on the market as we do now. As Windows 7 comes out, that becomes the new baseline, it is 100 percent compatible to Vista. Windows 7 is an evolution of Vista if you like.

Negative criticism of Vista when it came out was more to do with compatibility and drivers for hardware compatibility and that has changed dramatically because we made significant investments to make that an easier experience for customers.

Certainly there was negativity around when Vista first came out, but I think it’s fair to say we addressed many of those concerns.

CRN: Will resellers be impacted following the Microsoft and Telstra Software-as-a-Service (SaaS) alliance?

TF: What we are addressing with the Telstra alliance is the SMB customer space.

We are trying to reach a market that I don’t think exists today in Australia. When you look at that small business market, these are not necessarily people who have any IT skills, so they will still require the channel.

We do maintain a position for the channel because there are other services that these customers may need, including installing PCs.

We are still making sure the channel makes money out of this, too.