Steve Ballmer, in an interview with the India Economic Times, said that while he still sees a place for traditional software distribution, “I would say we are moving to a world where there is a lot more electronic distribution. It is a new style of software, not the old-style distributed electronically.”
No surprise there–Microsoft is facing increasing competition (especially for its Office suite) from downloadable software, most of it free. Google is moving into the space with web-based services. Salesforce.com and other software-as-a-service players have proven the model works for pay as well, and service provider USinternetworking has done well enough at delivering others’ software (including PeopleSoft, Oracle, and other packaged applications) as services that AT&T acquired them.
But Microsoft’s play is something entirely different. Right now, Microsoft depends on its partners for more than 90% of its revenue–and its Live efforts could dramatically change that. Windows Live (and more specifically, Office Live) could put Microsoft into direct competition with many of its current channel partners for business from small and medium companies — especially those partners who have already started to provide hosted services for customers.
Forget the scandals, the trash-talking, and the rhetoric of this electoral campaign season. The big issue for the coming year is going to be economic uncertainty–and that uncertainty is distinctly non-partisan. Regardless of who wins, 2007 promises to be dicey for small and medium-sized businesses, and for the channel as a result.
It’s not all bad news. Concerns about energy costs and inflation will continue to drive projects that squeeze more efficiency out of customers’ computing investments (like server consolidation and virtualization, business process re-eengineering, etc.). And the available pool of IT talent is again starting to shrink, boding well for an increase in managed services, hosting and support deals. But those same forces are going to affect how quickly service providers, systems integrators and VARs will be able to respond to those increasing demands, and put pressures on how those services are priced.
Over the next few months, we’ll be looking on SearchITChannel.com and the other channel sites at the market and technology forces that will drive channel business in 2007. But as far as the underlying economic conditions go, the only sure thing for 2007 is that nothing is for sure, regardless of who wins how many seats in Congress in November. Now’s the time to take a hard look at what you’re planning for your business, and to make sure you’ve got your financial bases all covered for a bumpy ride.
How many times have you “made the sale” with IT managers at small and midsized companies, only to find out that they couldn’t follow through? Well, now there’s research that supports the anectdotal evidence that winning the hearts and minds of the IT staff at smaller companies, while not necessarily a waste of time, is an activity with very little ROI.
Shamus McGillicudy reports a survey by Info-Tech Research Group Inc., found that the smaller a company is, the less likely its IT managers are to be making spending decisions. “At companies with 40 or fewer employees, only 20% of IT managers had a say in such decisions,” he reports. For companies of 41-100 employees, only 30% had any influence; and at companies with between 101 and 200 employees, 45% claimed to have a stake in the company’s purchasing decisions.
If you’ve been around the SMB market at all, it’s easy to understand this data. Companies with fewer than 40 employees seldom have an “IT manager” that rates as an executive within the company. In my experience, the majority of companies of that size lump IT with facilities management, unless they’re technology-focused. Business managers of smaller companies tend to hold purchasing authority closely.
In other words, this research seems to provide metrics to the obvious. In fact, the influence of IT managers at SMBs is probably even less than the survey reports . What would be more interesting is to find out how many companies of that size have effectively outsourced the IT manager job to a managed service provider.
As we prepared to launch SearchITChannel and its daughter sites over the past few months, I spent a lot of time listening to people who labor in the IT channel, and to the people who run the channel programs at a number of major information technology companies. And I took away two major themes: vendors are as hungry as ever for channel partners; and resellers, integrators and consultants are more suspicious than ever of vendors.
The reasons for the former are pretty clear: regardless of how much they invest in direct sales and services organizations, the major IT players are utterly dependent on the channel to get their product in the hands (or the data centers) of most of their customers. The reason for the suspicion is equally evident: channel companies increasingly see suppliers’ services efforts and other initiatives competing with them for their customers.
Network consultants and value-added resellers looking for more business (and who isn’t?) should click over to T1Rex for an introduction to the VARNetwork. In short, the VARNetwork is a database of value-added resellers and network consultants for business owners seeking network services and products. If you’re a VAR or consultant, it’s free to get listed in the database. The catch is that you give a little back to the VARNetwork after you complete a project that came from a VARNetwork lead, and those VARs that agree to give more rank higher in the system. Still, it may be worth investigating. If being listed in the VARNetwork doesn’t bring in any leads, you’re only out the time it took to register your company.
In an article on SearchSecurity.com, Stephen Toulouse, senior product manager for Microsoft’s Security Technology Unit, defends Microsoft’s foray into the security market and claims that it will have no impact on the life of other security vendors:
“I disagree with those who say our security moves are endangering the future of independent security vendors,” he said. “The threat landscape is always changing and I don’t agree that individual companies will go away.”
While Microsoft is doing right by getting serious about security, the company’s execs are being short-sighted if they think it won’t have an impact on a market its products helped create — not to mention Microsoft’s past history with squelching the competition (Remember Netscape?). Rather than arguing a moot point, MS should be reminding its critics that it’s attempting to give them what they wanted in the first place — a more secure product. Regardless of how that security is built in to MS products, it’s likely to impact the vendors who built their business around securing them. Denying that is only going to make the market more suspicious of Microsoft’s motives.
If you’re one to bet on the success of new technology and the potential ruin of the old (and your presence in the reseller business is evidence enough that you are), put a few bucks on the tubercular demise of Blockbuster and the rest of the walk-in video rental industry.
That’s great news for those of us who don’t have the patience to wait for Netflix to deliver a movie and would rather eat burned popcorn from a malfunctioning microwave while watching reruns of Full House than step into another Blockbuster.
It’s also good for those of us who think On Demand would be great if it ever had enough Supply. Two new movies a week doesn’t provide a ton of selection, you know? So downloadable is the way to go.
Sure, there are the tiny problems that go along with any new approach. “What are you going to watch it on?” asks one colleague, whose imagination is unfortunately limited to what is technically possible, or at least practical. Handheld video units like Apple’s own iPod don’t have enough storage or a big enough screen for a full-length movie. Laptops it is, at least for now.
Hewlett-Packard announced today that Patricia Dunn, who chairs its board of directors, will resign and be replaced by CEO Mark V. Hurd, who will assume both titles.
Her resignation follows revelation of the methods HP investigators used to try to uncover the source of information leaks to the press from a member of the board of directors. The leak involved a CNET story describing a days-long retreat taken by top HP executives and board members to plan strategy for the coming months.
Dunn did launch the investigation, after deciding the leaked information could affect the price of HP’s stock, but did not supervise it directly because — as a board member — she was a possible target of the investigation.
Long-serving board member George A. Keyworth II, who confirmed that he was the source of the leaks, also resigned.
Among other methods, the investigators — some of whom worked directly for HP and others who were contractors — used a technique euphemized as “pretexting” to get access to phone records of HP board members and several reporters. Pretexters call phone companies and lie about their identities in an effort to have the otherwise-private phone records of a target given to them.
Dunn apologized in a published statement that said, in part: “Unfortunately, the investigation, which was conducted with third parties, included certain inappropriate techniques. These went beyond what we understood them to be, and I apologize that they were employed.”
In another published statement, Hurd promised he would take “action to ensure that inappropriate investigative techniques will not be employed again. They have no place in H.P.”
No one has ever accused major IT vendors of being role models. Microsoft gets the most public heat, but it’s far from the most loathed, or most unethical, in the business. Resellers, whose reward for having built a thriving market for some new product is to have the largest customers stolen by a direct-sales force more interested in bonuses than either the reputation or long-term growth of the products they sell.
Every once in a while someone pulls a real doozy, though; the kind of diabolity you’d never believe of an otherwise respectable company. Something so contemptible you’re sure the story has to have been exaggerated by a competitor. No one in their right mind would have done something like that, right?
This is one of those times. HP, driven to paranoid mania by a perfectly ordinary story revealing that the company’s top execs had sneaked off to a posh resort to put together a strategy outline for the next 18 months. From a reporting perspective it was a fine story; from a business perspective, the strategy itself is a yawner.
But HP chair Patricia Dunn got so ticked off she launched an investigation, against the advice of HP’s corporate governance guru, that eventually let to an HP contractor hacking into the private phone records of both board members and at least one reporter involved in the story.
It seems fairly obvious that vendors use security alerts to promote themselves and devalue their competitors, as addressed in this CRN article. And I imagine many channel folks can relate to the challenges that result, i.e. defending vendor products to their customers, separating the security alert wheat from the chaff and relating that info to their customers. But how you handle this challenge? I’d like your input. How do you manage security alerts? What is your process for analyzing them and communicating with your customers? Post your comments here or email me directy. Perhaps we can come up with some best practices.