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Microsoft Cloud Channel Conflict - Deja Vu All Over Again

Office 365 Announcement Sends Mixed Signals About Partner Roles

When Microsoft announced their new cloud-based Office 365 service yesterday, the press release didn't say much about how it would actually be deployed.  But, from what their executives said at the announcement event, the take-away was that customers would get at the new on-line versions of Office, Exchange, SharePoint, and Lync through a Microsoft-run public cloud.  So I thought and thus reported, but that was only the less interesting half of the story.

Fortunately I am read in Redmond, and this morning someone from Microsoft who works in the area of "hosting, telecommunications, and media partner channels" sent me a nice note pointing to the... ressst of the story, an article written by Marco Limena, the Microsoft VP of Communications Sector Business Channels.  The title of the article asks a question that I must admit crossed my mind after I filed my story, "Office 365: What Does It Mean for Hosting Providers?"  It turns out the answer is, "A lot, maybe."

Provider Partners Vital
In addition to providing Office 365 on its own cloud, Microsoft aims to also make it available through cloud service providers, like hosting services, telcos, and others, who will offer "value-added services that extend beyond the features offered in Office 365."

Those services will include API-based extensions to the core Office 365 apps or other applications integrated with them, like content management, business intelligence and vertical industry SaaS apps.  Moving down the cloud stack, Limena also points to services like Active Directory synchronization, added storage and security features, archiving, IT management, and more.

After providing a pair of seemingly obscure partner example/testimonials perhaps intended to be folksy, Mr. Limena closes with the following paragraph:

"Microsoft sees service provider partners becoming more important as the cloud becomes more predominant. Given the experience of hosting service providers in deploying and selling infrastructure and cloud services, businesses will depend on them for IT as a service. For Microsoft and its hosting partners to effectively compete and succeed together in the under 50 users segment and beyond, Microsoft is working with partners to move them from commoditized hosting services to become one-stop, location-independent IT providers."

We Don't Need No Stinking Partners
Compare that to the statements made by Microsoft Office Division President, Kurt DelBene at the Office 365 launch yesterday wherein he heavily touted the "20 football fields of elastic IT capacity" that will be reprovisioned every 90 days and made available to customers under "99.9%" SLAs that guarantee uptime against refund penalties.

As an aside, "three nines" sounds good until you consider that it translates into more than ten minutes of downtime per week.  By comparison, "four nines" means about one minute and "five nines" - the gold standard of traditional telco services - about six seconds of downtime per week.

So, the top Office guy is saying Microsoft is "all in" as a direct cloud service provider and not so much as mentioning Office 365's other channels while the Microsoft guy responsible for the telco channel, the best bet for true utility-grade cloud service delivery, struggles to be heard when he says the provider channel is important to Microsoft.  Which is it?

DelBene's point sounds a bit specious, even though he is the master of the Office 365 domain, while what Limena says sounds like a sensible strategy, even though he is, no disrespect intended, a share cropper in that domain.

Lord of the Flies, Again?
But, relative wisdom and rank aside, what they are both really telling us is how their compensation is a cage match purse and how Steve Balmer is still the Lord of the Flies, with an indefatigable faith in the collective earning power of internecine struggle.

It's so 80's, "Greed is Good", and, sadly, it perpetuates the zero-sum game that Microsoft has played with its customers, partners, and employees since that storied decade - mining billions from a carefully managed gap between inspired ideas and indifferent execution, the idea of five nines versus the execution of three.

OK, I admit it, I am feeling a bit cranky right now from spending the weekend resuscitating a Windows PC that died, not because I dropped or abused it, but because I let it run Windows Update on itself which, unbeknownst to me, did not create a restore point before working its destructive magic.  The saddest part of all is that every Windows user reading this knows the precise meaning of every word of that sentence and just heaved a deep empathetic sigh.  It was a "no nines" weekend and we've all had them.

Steve Balmer has famously said that Microsoft is "all in" on the cloud, but the disparity of the executive utterances within the context of yesterday's momentous announcement tells us that the company is still figuring out what "all in" means.   To some there, like DelBene, it seems to mean adding value to the cloud by putting Microsoft software, as is, into it.  To others, like Limena, it seems to mean adding value to Microsoft software by enabling cloud providers and other partners to improve, extend and reshape it in a new model.  I know which one I like the sound of better.  How about you?

More Stories By Tim Negris

Tim Negris is SVP, Marketing & Sales at Yottamine Analytics, a pioneering Big Data machine learning software company. He occasionally authors software industry news analysis and insights on Ulitzer.com, is a 25-year technology industry veteran with expertise in software development, database, networking, social media, cloud computing, mobile apps, analytics, and other enabling technologies.

He is recognized for ability to rapidly translate complex technical information and concepts into compelling, actionable knowledge. He is also widely credited with coining the term and co-developing the concept of the “Thin Client” computing model while working for Larry Ellison in the early days of Oracle.

Tim has also held a variety of executive and consulting roles in a numerous start-ups, and several established companies, including Sybase, Oracle, HP, Dell, and IBM. He is a frequent contributor to a number of publications and sites, focusing on technologies and their applications, and has written a number of advanced software applications for social media, video streaming, and music education.

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