Microsoft's Partner Channel the Strongest for Software, IDC Says

Published: January 10, 2006

by Alex Woodie

In the IT business, what separates winners and losers is not necessarily the vendor with the best products or services, the best prices, or a balanced combination of the two. One of the most important factors in determining the long term success of a particular vendor is the depth and breadth of the partners it goes to market with--its channel. IDC recently analyzed the channels of the 25 largest software companies and concluded that Microsoft's channel program just edged out IBM's PartnerWorld for top billing.

Microsoft is currently 18 months into a redesign of its partner program, which bears the less-than-gripping name "Microsoft Partner Program." With 240,000 members, this program is by far the largest of any vendor in the world. Its size reflects Windows' strength in desktop PCs and entry-through-midrange servers, and the fact that anybody who wants to write stable software for this OS needs to sign up for the program.

Microsoft segments its program into three tiers, including Registered, Certified, and Gold. Depending on the tier, partners receive different types of services and functions, including lead generation, skills development, and software certification. Like other software companies, Microsoft has a wide mix of different types of partners, including OEMs like Hewlett-Packard and Dell, ISVs like SAP and Symantec, major distributors like Avnet, and thousands of regional and local resellers serving small, medium, and large customers with Windows PCs and Windows servers.

In its competitive analysis, titled "Worldwide Software Channel Program 2005 Vendor Profiles," IDC lauded several aspects of the Microsoft Partner Program, including actions Microsoft took to better understand and work with partners, and for extending lead generation and account management capabilities to Certified partners, which accounts for nearly 28,000 members. Previously, only Gold members, which account for one-half of one percent of the quarter million partners, received this level of attention from Microsoft.

Steve Graham, a vice president with IDC, said Microsoft's channel program leads the industry due to its "strong program structure, scope of partner relationships, and its ability to deliver." What's more, the vendor's "competencies framework" also played a big role in the company achieving this leadership position, he said.

Microsoft, along with IBM, ran away from the rest of the field, and these two companies were ranked very closely in IDC's final analysis. However, Microsoft just nudged out IBM by a smidgen in both of IDC's main measurements: a vendor's "ability to gain share," which measures things such as a vendor's ability to set standards and its current market share, and its "opportunity alignment," which measures how well IDC thinks companies have designed their channels. It was the second straight year that Microsoft has come out on top.

While the Microsoft Partner Program won the contest, IDC also had some good things to say about IBM's PartnerWorld program, which serves about 16,000 partners around the world through Premier, Advanced, and Member tiers. While IBM and Microsoft go head-to-head in some software markets, the two companies have vastly different product lines and make money in dramatically different ways, and therefore their partner programs serve different goals.

In particular, IDC seemed to approve of the changes IBM is making to incorporate a separate ISV program into its overarching PartnerWorld program. IDC said that IBM will gain greater "synergy" out if its "robust" partner profiling system when the previously separate programs for ISVs and systems integrators, resellers, and consultants are merged into PartnerWorld. When merged, IBM will be able to more effectively drive corporate goals through its partner relationships and its partner profiling system, IDC says.

Up-and-comers on IDC's list include Progress, Oracle, and Computer Associates. The analyst group says all three of these companies have demonstrated a growth and commitment around their respective programs, and applauded Progress, in particular, for its strong focus on integrating business planning into its overall approach. Oracle improved its SMB mandate, IDC says, while CA received an atta-boy for turning its "lackluster" program around into a "viable and competitive" one.

IDC noted some positive aspects in several others partner programs, including those operated by Novell, Intuit, SAP, Sun Microsystems, BEA, and Sybase. However, all of these vendors' programs lacked cohesion in terms of building out a well-defined ecosystem and integrated support infrastructure, the analyst group noted. The biggest improvements in 2006 are expected from Sun and Novell, which IDC said had the most sophisticated programs of the six.

IDC expects spending on partner programs to drop this year, following two years of increased spending and realignment on the part of many vendors, most notably IBM and Microsoft. The paper can be downloaded from Microsoft's analyst relations Web site at www.microsoft.com/presspass/itanalyst/default.mspx.