Microsoft Strikes Back at Apple: Opens Second Retail Store

Last Friday, Microsoft opened its second retail store in Mission Viejo, California (first one in Scottsdale, Ariz). Nearly a thousand people showed up at the grand opening making it official to Apple that the war is on. There is no doubt that Microsoft is looking to built a stronger relationship with its retail customers from the success of Apple's retail strategy. Now Microsoft can showcase all of its relatively unknown products while looking to build buzz around Windows 7 PCs. Will the younger, mall-roaming audiences take interest in Microsoft? We'll have to wait and see.

ASCII Success Summit - Los Angeles 2009

Last week I attended the ASCII Success Summit in Los Angeles.

There were about 100 VARs who attended the show. I didn't get to see all the presentations as they divided the group in half in order to fit in all the presentations that day. In the future ASCII should either let members determine which presentation they want to attend or allow speakers to talk to all attending members.

The two best presentations at the event were Kent Erickson (ASCII member) from Pointivity and Ron Gavlick from Zenith Infotech.

Kent Erickson's presentation focused on the shift in the IT industry from traditional hardware sales and break/fix services to hosted services and cloud computing.

To view Kent's presentation online, click here:
http://www.slideshare.net/secret/EKSs1rVyDP1xYb

Ron's presentation focused on Zenith's Backup and Disaster Recovery (BDR) device and the advantages of the BDR over traditional backup systems.

Other speakers at the ASCII Success Summit included:

• Evolve Partners on Microsoft BPOS
• ASCII Member, John Endter for Microsoft Response Point
• ASCII Member, Dave Seibert for StorageCraft
• ASCII Member, David Lawrence for Efolder
• Autotask
• Storage Guardian
• Matt Makowicz – Managed Services Books
• ARRC – HaaS Strategy
• Reflexion

In talking with the attendees and ASCII members you can still see there's a big divide and difference in the IT market between traditional VARs (break/fix) and the MSP industry. Many of the smaller VARs are just getting into MSP or only entered into the MSP market with the last 6 months. Even fewer VARs are offering hosted services, they are still providing on-premise solutions with large hardware capital expenses which involve labor intensive support and ongoing maintenaince.

I had great conversations with many of the VARs about the value of adding hosted solutions as another sales tool. A handful mentioned they are reselling Google Apps and Google Email to their customers, but when questioned about revenue all them said they are not making any revenue off the sale of Google Apps/Gmail but provided the service to the customer to maintain the relationship and desktop support and desktop sales. The same goes for SalesForce.com and other online applications. The traditional VAR is being squeezed out of the market and companies like Amazon, Google and Microsoft are providing cloud based hosting services direct to customers with little or no revenue opportunities to the VARs.

It will be interesting to see how VARs move forward and what solutions they adopt, especially cloud or hosted solutions over the next year.

Parallels Summit 2009 - A Big Success!

Parallels Summit 2009 was a big success this year and thanks to the Parallels team for putting on a great show! Attendees could clearly see why Parallels is becoming the industry leader in this space.

Serguei Beloussov, CEO of Parallels, provided the key note speech to about 1,000 attendees.

Serguei's presentation focused on the latest industry trends and he identified the channel falling into 5 different computing or cloud models.
1) Google Cloud, 2) Microsoft Cloud, 3) Other Platform Clouds (HP, IBM, Apple, EMC, Yahoo, Amazon, Facebook, Adobe and more), 4) Channel Clouds like Pointivity (mass market hosting, Telco, SaaS VARs, MSPs) and 5) In house clouds (large companies).

Serguei noted the keys to partner success are to become a one stop shop, differentiate your product offering and focus on customer and partner retention. Many VARs will not have the resources to support large product lines and it will be important for VARs without hosting expertise to partner with hosting providers who can support and train their staff both on the technology and on how to sell and position these products in the marketplace. Serguei noted there's a huge demand both from customers and within the IT industry for cloud and SaaS computing solutions.

The show included a great set of speakers most notably Morris Miller (founder of Rackspace) and Bill McNee (Saugatuck Technology). Morris focused on the importance of POSITIONING and provided a month by month/year by year historical overview of Rackspace's go-to-market strategies and product positioning strategies. Bill McNee provided in-depth research on the current SaaS industry and provided an end-user / CEO perspective of the hosting industry.

Over 160 companies utilize Parallels Automation and thanks to Parallels team for promoting Pointivity in your presentations!

Another big announcement was the release of Parallels SaaS module which now includes over 200 products that can be delivered through one interface. If you are a ISV or have a hosting solution product, please check out www.APSStandard.org. APS Standard has an open API directly to Parallels Automation engine, allowing any ISV product to be integrated with the Parallels engine. By leveraging this API you can get access to hundreds of master distributors and master resellers worldwide. If you need any help on getting your product integrated with Parallels, please feel free to contact partners@pointivity.com.

The two best additions to APS Standard and Parallels Automation at the show were Global Relay's message archiving and Open Exchange email replacement for Exchange Server. Both products are much needed in the SaaS and hosting industry and offer tremendous value to end-users and companies looking to outsource complex email services on a low cost, month to month, pay as you go option.

Brand Power: Apple Blowout Quarter Microsoft Earning Plunges

Following yesterday's blowout quarter by Apple, Microsoft announced 5,000 job cuts and decreased earnings today (by 11%). It came in no surprise that EVERYONE should be doing bad; as a matter of fact, high-end brands were expected to be obliterated in this recession but Apple was able to beat expectations delivering blowout numbers.

Last year analysts were skeptical about Apple not having a low-end notebook or even a reduced MacBook while competitors were rushing out with netbooks to target the low end of the market.

Building a brand like Apple is not about volume but intimacy with the customers, a highly targeted relationship with the customer to create brand appeal. Knowing your market and meeting customer demand is where it all starts, the same solution can be sold very differently if you position it properly. Much like how automobile industry positions their brand: Toyota can sell the same Camry for 40-50% more with Lexus badges on it simply because they knew and targeted two different types of buyers.

Microsoft on the other spectrum went for volume (surprise?) and low intimacy thus its revenue and profit rely on mass market adoption. In this model profit margins erode rapidly over time thus new/updated product must be introduced. This is where Microsoft is having issues with their low margin Windows XP being the ideal OS on all the little netbooks (accounted for a majority of the increase in overall mobile PC shipments to U.S. retailers in December, according to the NPD Group. The number of laptops shipped rose 23% to 1.9 million units, with 14% of that growth attributable to mini-notebooks ). Windows Vista is not suitable for netbooks since it needs much more powerful hardware to support it.


The take away? Become the premium brand to your customer regardless of where your market focus is and build strong relationships that create stickiness with your offerings. At the end of the day you're not the only solution provider in town, be creative and maximize the tools and resources (private label) around you.

The Empire Strikes Back: Reselling Google Apps

Another vendor has entered the channel with promises and optimism, this time its the search king Google. Yesterday Google introduced their new Reseller Program focus solely on gApps Premier Edition (email, chat, word, spreadsheets, presentations, and security). Until now Google only cooked up the menu to resell Google enterprise search appliances, Apps and Maps to enterprise customers. Key word 'Enterprise' partner program.

And now Google is ready to grow their channel during this economy knowing Microsoft is consolidating with web-based Office Web Applications not ready until 2010.

Google and Microsoft solutions can actually coexist depending on each customer on a case-by-base basis since Google has a slightly different approach to their channel. Solution providers or VARs may even combine the two but ultimately Google App is more appropriate as a cloud-based solution at lower cost than say an on-premises solution from Microsoft. Microsoft is restructuring its channel while Google has just begun, the perfect storm's thunder and lighting.

I am not surprise that Google doesn't having a deal registration because they spend years building their brand and offer free tools directly to customers. So the customers are already trained and used to their brand while Microsoft spend trillions creating products to build a service around their brand.

VARs and solution providers should focus on the business drivers: Continue to foster your relationship with your customers, look for ways to add value to their business, strengthen your brand, and deliver flexible solution (SaaS) that you can build your business on for the long haul. That translates to high customer retention, brand recognition and recurring revenue with real margins!

Margins + Branding + Process Automation = Pointivity's Partner Program

Over the past few weeks I wrote about the changes in the industry and the shifts in perception from IT consultants, vendors to solutions providers. It is easy to see why we've designed the partner program to focus on developing the the weaker areas for VARs: branding, margins, process automation, and product offerings. Here is the value proposition for our program:


Leveraging Pointivity's superior private label hosted services (with storefront!) allows VARs to offer a wide range of products without having to pay for hardware, software, licensing and maintenance.

One of the fastest way to start is to expand your offering to your customers providing a complete set of services such as hosted Microsoft Exchange, SharePoint, Dynamics, and wireless emails to earn additional business process outsourcing revenue.

Majority of the businesses needs emails and offering enterprise email solutions such Microsoft Exchange and Blackberry services creates added value from a cost saving(CapEx to OpEx) and infrastructure management perspective(overhead and risks). If you are able to offer the basic IT needs to your customer, it will create future opportunities for additional services while lifting you towards the trusted advisor role. We're working on additional services such as email archiving or efax to complete the email offering.

Our program includes “on-demand” provisioning automation, ecommerce engine (online store), integrated billing (payment gateway options), and feature-rich control panel for administration and private label control panel for end-users.

Your own private label online store allows your customers to sign up (self-service checkout) then the system automatically provisions and deploy the services immediately. It is all about streamlining your business process while providing a branded solution. As the store grows we will be adding more business essential applications such as accounting, CRM or even dedicated servers to strengthen your hosted services offering.

In addition, the solutions is being offered on a wholesale pay-as-you-sell basis allowing your own pricing structure to adjust to the way you sell. You can sell them in packages or include it in your other solutions such as managed services, backup/disaster recovery or even application hosting depending on how you bundle and deliver them.

The more hosted services you offer the higher chance of customer retention because you’re able to provide a wider range of products while aligning both you and your customer’s overhead to revenue via SaaS. Creating value for your customers is the key for high customer retention and it can be done easily with our partner program.

Step Right Up: Microsoft App Store Now Selling at a Online Store Near You

Microsoft today launched their first online store in the US (already available in the U.K., Germany and Korea). With the launch, US customers can buy first-party software and hardware directly from the internet. Products include software, devices and hardware, after payments are confirmed, customers can immediately download products and install them right away.

As we continue to see the "going direct" strategies implemented by Microsoft, VARs will need to act rather than compliant in adapting the inevitable - MSP will have a tough time competing against the big daddy (that used to make them money) for what will become the future of the channel, wait a minute what channel? According to ChannelWeb, Allison Watson, corporate vice president of Microsoft's Worldwide Partner Group, made no mention of the Microsoft Store and said that there were plenty of opportunities (hmmm...really?) for VARs to grow, as long as they stay focused on projects that improve energy efficiency, boost productivity and drive down costs.

I wonder what sort of margins can you continue to profit from Microsoft? How long can VARs sustain to this rate of change? Don't you have to survive so you can continue to deliver value?

In addition, they are rolling up the end-user customers with deals like going direct aggressively with 0% finance for Dynamics for 36 months (launched today as well) or the BizSpark program offering Web startups free software before becoming profitable. If any of these pilot programs are wildly successful (which I don't see why not), more products and services will be rolled out with even more aggressive offerings, don't forget even in this recession Microsoft is one of the few companies that's got a ton of cash in the bank, $26 billion to be exact.

You can't fight the trend as VARs or MSPs and you must live to fight another day by transforming your business to deliver IT smarter.

Salesforce Chases After Cloud With Force

Salesforce announced the addition of Force.com, which provides a hosted infrastructure for customers to run websites in Salesforce cloud. They're also going to provide the building blocks to integrate with business applications when everything is available in 2009.

It sounds like they're trying to add value to their offerings via the cloud hype while expanding their product reach further with Facebook and Amazon partnership.

Moving forward, Salesforce will continue to be under pressure from Oracle, SAP and especially Microsoft's new Azure, which is pretty much the same offering. Not to mention Microsoft is working hard to replace SaaS with S+S, it's amazing how Salesforce expects to pass US$1 billion in annual revenue for the first time but its profit margin remains extremely slim.

The IT value stack is getting squeezed by players of all sizes trying to reshape the changing roadmap in IT. As we continue to see acceleration in the cloud hype there is also a fundamental shift in how applications are used and delivered but until the general perception adapts to the cloud idea, I still believe in the hybrid model that will emerge as the real solution to the future of SaaS.

Another New Site launched by Microsoft on S + S

Derek pointed out to me today that Microsoft launched another new site - Software + Services yesterday. I like that video on the homepage showing how the "Microsoft Cloud Server Provisioning" works and my favor part is the dude receives a message on his TV screen about his server while he is in the middle of his Xbox game! He then walks up to the TV and touch-screens his way to view his cloud provisioning progress.


Clearly Microsoft is ready for the S+S assault 2.0, it'll be interesting to see how ISVs and MSPs respond.

Microsoft Azure: Their Entrance Into Cloud Computing

Monday this week Microsoft launched their new cloud computing AZURE. Billed as "an internet-scale cloud services platform hosted in Microsoft data centers," which explains why they were shipping massive number of servers for months now.

Azure is designed to provide an "operating system" and a set of developer services that will enable a broadening of the Microsoft platform from on-premise to the Cloud. It should be noted that Azure is positioned as a platform similar to Google Apps and just like before Microsoft is the last to the game and will have their impact. In addition, Microsoft is to provide hosted Windows Servers with full Admin access. Supposedly you can choose how much RAM/CPU you want. (2009 release)

Get ready as Microsoft continues to eat up the technology layers from application to platform, to infrastructure. Stay tune for more information later.