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Volume 20, Number 25 -- July 18, 2011

Microsoft Spends Big Big Bucks On Partner Channel

Published: July 18, 2011

by Timothy Prickett Morgan

The old adage that it "takes money to make money" is not any less true in the Internet Age, and those shelling out the biggest bucks to their partner channels seem to be benefiting the most these days. That said, partner programs have to be adopted to the Cloud Epoch, and that is precisely what Microsoft did at its Worldwide Partner Conference 2011 event in Las Vegas last week.

The amount of money Microsoft is throwing at its channel is truly astounding: $5.8 billion in its fiscal 2012 year, which started in July. Granted, that money is going to be spread across an army of 640,000 global partners--those are companies, not individuals. That works out to $9,062.50 per partner when you do the math, and that sounds like a lot less money when you put it that way. And the funds, of course, are not distributed evenly, as is the case in every partner channel.

As The Four Hundred reported last week, IBM's cross-group Midmarket Division spends north of $100 million on advertising and co-marketing per year in the midmarket. It's not clear how many midmarket partners IBM has, but it has 438,000 customers. The Microsoft figure above is not exactly an apples-to-apples comparison either, since it includes the value of tools, training, and incentives to help partners sell the entire Microsoft stack of products and now online services.

The things that Microsoft thinks are significant are perhaps as important as the pile of cash that it is throwing at partners. As you might imagine, cloud is heavy on Microsoft's mind, with so many competitors trying to pick off its desktop Office business, as well as set up compute clouds that help SMBs and large enterprises spend less money on Windows systems software. In August, Microsoft will roll out planning services that help partners work with their customers to sort out where to deploy their systems and development software on private clouds or Microsoft's Azure platform cloud. The company is also giving customers additional (and unspecified) incentives to move companies to Azure and to help customers build private clouds upon Hyper-V. Microsoft is also cooking up new licensing schemes and incentives for customers and their partners to allow software licenses to be moved between private clouds and public clouds from certified Microsoft partners.


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