Microsoft expands Surface channel, slowly, carefully but not yet locally

Microsoft global channel chief, Phil Sorgen, has told CRN Australia not to read too much into the vendor's expansion of the commercial Surface strategy in Japan, Hong Kong and the United States.

In November, Sorgen wrote in a blog post: "To address commercial customer demands, we are introducing the Surface distie-led Commercial Program in Japan and Hong Kong, which enables existing Surface distributors to resell Surface beyond the ADR [Authorise Device Reseller] channel."

At the time, Microsoft also expanded the channel for Surface in the US, to allow "VARs that meet the criteria required to resell Surface to the public sector".

The reason for this vertical expansion was because "we heard from our customers in this space that their specific purchasing criteria often made it difficult for them to locate a partner to purchase Surface devices from directly", wrote Sorgen.

Speaking to CRN Australia on Thursday, Sorgen said these moves shouldn't necessarily be taken as evidence of an impending overhaul to device's restricted channel. "We have taken three additional steps in those three cases, but we have not said what we will or won't do next."

He added: "But yes, we are in 29 markets today and there will be a day when we are probably in more markets and we will learn from the markets we are in, and the same is true of this expansion."

In Australia, Microsoft has limited the commercial channel for the tablet to 14 authorised resellers: Somerville Group, Staples, Stott & Hoare, ASI, Datacom, Data#3, e-Volve, Dimension Data, Brennan IT, Triforce, Trident, Insight, Ensyst and Learning with Technologies.

The device is also available from retailers JB Hi-Fi and Harvey Norman.

The restricted channel has been a sore point for local resellers, with one partner telling CRN's Tony Yoo in November: ""It is frustrating to me that as a long-term [Microsoft] partner with silver status that we cannot have resale access to the Surface tablet."

Sorgen shed some light on Microsoft's reasoning for the slow-and-steady approach. "We have said all along that we would first build a Surface commercial channel strategy and we would do it in limited way and we wanted to absolutely get it right and make it profitable for those who participated."

He indicated he was well aware of the complaints from those resellers shut out of the authorised reseller program. "I certainly listen to our channel. I would never want to give the impression that what you are sharing is news to me. I have spoken to many of those partners myself. Our commitment is to do it right and I think we have sent a message to the channel that we have taken thoughtful steps."

Sorgen also spoke about the reasons Microsoft entered the device market.

While there have been suggestions that Microsoft is using Surface to drive innovation among Windows OEM partners, Sorgen stressed the company had entered the hardware market to be successful in its own right.

"We are in the Surface business to be successful and profitable and we think it is a great business to be in, and to do that we think we need to be innovative and successful… [but] we are not just doing it to be innovative and to be a market bellwether, we are doing it because when you are innovation and create differentiation you create categories. I don't want it to be perceived as one is mutually exclusive of the other."

After a rocky start, the Surface has been improving its scorecard recently. IDC announced that Microsoft had a 69 percent share of two-in-one shipments in Australia in the third quarter - bigger than Asus, Toshiba, Acer and Lenovo combined.

Sales of Microsoft's Surface tablet-laptop computers reached US$908 million in the company's first quarter.