Microsoft dumps US$1.7B into channels

Software giant, Microsoft would pump another US$200 million into its channel initiatives in the new fiscal year, bringing its total worldwide channel budget to a staggering US$1.7 billion.

The announcement was made by Allison Watson, the company's channel chief at this week's Microsoft's Velocity Worldwide Partner Conference in Toronto, Canada.

This as the company attempts to fend off Linux and address perennial Windows security concerns.

Watson was convinced that the additional channel investment would pay off in increased Windows-based solution deployments by partners. In fact, she predicts that solution providers teaming with Microsoft would see a solid rebound in their services business this year, propelled by the sale of Microsoft software.

"This is the year we will start to see it," said Watson, vice president of the Microsoft Partner Sales and Marketing Group. "This is the year where all the assets have come together for Microsoft to deliver velocity for our partners and our mutual customers."

Watson said the channel budget will be spent mainly on Microsoft-subsidised marketing and training programs, including adding 200 more presales technical specialists to assist partners in winning deals.

On top of the US$1.7 billion, Microsoft is spending another US$200 million on a high-profile "Desktop Deployment" initiative that would be detailed at the conference. The initiative includes adding 57 field specialists to help drive Windows XP and Office 2003 sales.

The channel spending uptick came on the heels of a memo from Microsoft CEO Steve Ballmer recently that called for US$1 billion in cost cutting by the company in its 2005 fiscal year, which began July 1. Microsoft said the cutbacks would not affect its increasing channel investments.

Among other initiatives that Microsoft would detail this week are a Windows Marketplace online selling site; a new marketing tool for solution providers and ISVs; a Partner Learning Centre; the global rollout of Channel Builder, an online catalogue that allows partners to network; and a revised Windows Resource directory that lists partners by new criteria, including solution competencies.

Microsoft would not break down the US$1.7 billion figure into individual buckets, but it is seeding new initiatives for ISVs and system builders as well as solution providers that serve SMB customers.

One long-time Microsoft solution provider said the heavy channel investments over the past three years are taking root in the field, especially efforts to get local Microsoft offices to work with partners.

"It has taken years to change the thinking of the people in the field about the channel focus, but I am finally seeing really good cooperation and execution from the field personnel that we engage with on a daily basis," said Teri Green, director of National Partner Alliances at Born, a Microsoft Gold Certified Partner based in the United States.

Part of that is getting partners and local Microsoft offices on the same page.

For the new fiscal year, Microsoft has instructed each of its 67 global subsidiaries to free up 35 percent of the local marketing budgets for go-to-market campaigns they run in conjunction with partners, up 5 percent from fiscal year 2004.