1: If Steve Ballmer’s out, who’s in?

Don’t get me wrong. This partner crowd is not Wall Street — there are no torches and pitchforks. But they are acutely aware of the pressure Ballmer is under as Microsoft tries to navigate this very tricky cloud course. So speculating on who’s next is sort of natural.

No one really expects the “Bill-Gates-returns-to-save-the-day” scenario play out.  Some musings though: Maybe Microsoft buys Nokia (it’s number one partner on Windows 7 Phone)  and gets Stephen Elop back into the fold as number 1.

Steve Sinofsky has to be the inside favorite to take over the top slot, although some in Redmond see Chris Capossela (chriscap) as a dark horse.

2:  Dynamics NAV ERP isn’t anywhere near cloud ready.

It’s barely Web ready. Let alone Web-ready. Still.

Concern that the first release of Dynamics NAV cloud, due in 2012, will not support multitenancy was dismissed as nit-picking by one exec. Funny, what do you want to bet that when Microsoft finally does support multitenancy that multitenancy will become a huge selling point? And there is big concern among Microsoft Dynamics ERP products that Azure is definitely not ready to run ERP.

 3: The old Microsoft vs. Cisco unified comms war is back on.

It went away for awhile probably because Cisco picked its server fight with Hewlett-Packard but now the unified communications war is back with Microsoft Office president Kurt Delbene helpfully pointing out that ten million Cisco lines hit end of support soon and that a good new home for them would be Lync.

All the Microsoft execs and minions pounded the drum hard for Lync this week, claiming huge sales successes but it’s unclear where all those users are. Not even Microsoft’s own PR firm uses it.

COO Kevin Turner sounded downright irate talking about how Cisco “milked” 75% to 80% margins on its UC gear. (Note to Turner: Publicizing a rival’s high margins to a crowd of hungry VARs is probably not a wise strategy.)

 4: Meet Google: The New Evil Empire

This is interesting if not surprising: Google Plus has got a lot of knickers in a twist with its intrusive nature –yes even among Google fanboyz.

Here’s one comment:

“People I don’t know keep adding me to their “circles” on Google+…it is annoying as hell. A) I want out, but don’t know how to get out. B) This will be a giant PR disaster for Google. To paraphrase Churchill, never have so many been creeped out so quickly by so few.”

Turner got a belly laugh on Wednesday when he said Google had to have a mission statement to remind itself not to be evil. Smugness may not be a good policy here however: Many people see Microsoft as the lesser of two evils–maybe of three if you count Facebook. Not a compliment. It’s all relative.

5: Windows 7 Phone is good but still too late

Nearly everyone concedes that Microsoft finally has a strong phone OS. The problem is its a good phone OS circa a few years ago. And while Microsoft partners “get” that the company needs to use Bing to drive consumer interest and advertising, they’re not buying that the Bing “decision engine” outsearches Google. It just ain’t so no matter how many times you say it is.

Let us know what you think about the story; email Barbara Darrow, Senior News Director at bdarrow@techtarget.com.

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LOS ANGELES — It’s been an eventful 24 hours since I hit the tarmac at LAX Sunday to attend my first Microsoft Worldwide Partner Conference (WPC). From Dodger Stadium and its army of police officers to Microsoft CEO Steve Ballmer explaining why his “all in” cloud message at WPC 2010 scared him, there has been a lot of action. And more questions than answers. Here are 10 things that struck me as I made my way through the LA Convention Center and the Staples Center.

1: Do partners have faith in Jon Roskill?
Aside from telling partners to hiss at the mention of VMware, I wonder how convincing Roskill was in his keynote. Unlike, Ballmer, Roskill didn’t seem excited up on the stage. But then again, who could replicate that? Not mentioned was that coming into the show many partners are unhappy with the lack of information about their role (or lack thereof) in Windows Azure and Office 365. Some of that will be addressed Tuesday, or so we are promised. But if I’m a partner struggling to make ends meet and hear about how, for  very dollar Microsoft makes, I can make $8.70 or that 58% of partners are “in the cloud,” I have to wonder.

2: Steve Ballmer’s partner love.

So … which high-tech CEO should go first? A table full of VARs discussed this topic at a recent conference and the very non-scientific consensus was that the two execs in the most trouble are Cisco Systems’ John Chambers and Microsoft’s Steve Ballmer. The next question was: “who goes first?”  The still-very-unscientific consensus? Ballmer.

Now a high-flying hedge fund manager has weighed in. This week, Dave Einhorn called very publicly for Ballmer;s ouster.

That, tweeted colleague Carl Brooks, is like a weasel telling the farmer how to raise chickens.

Ballmer has been battered publicly by Wall Street and privately by Microsoft partners who have seen margins erode and products delayed, and the departure of admired Ballmer underlings including Bob Muglia. The memory of the Vista disaster still looms large. But at least the partners realize that Ballmer is shepherding Microsoft through perhaps its toughest transition ever…from a world dominated by on-premises IT to this whole “cloud thing.”

Granted Microsoft was slow to react. But slowness is kind of Microsoft’s default. Remember it took the company more than a year after Netscape’s browser coup to “discover” the Internet. Does anyyone remember Netscape Communicator now? And that tardiness came during the reign of the sainted Bill Gates.

Now, despite the calls for Ballmer’s head, some of Microsoft’s harshest critics say the company’s actually doing a lot of good things. An executive with a long-time Microsoft competitor sheepishly admitted that the new Windows 7 phone is a contender and that Azure appears to be a capable Platform-as-a-Service. He did not want to be quoted by name.

Mike Blake, CIO of Hyatt Hotels, said he used to have issues with the company but sees redemption.

“Microsoft has made a huge turnaround. At one point in my career, I completely hated Microsoft and now they’re building some pretty good products.”

Accordingly, Hyatt has already moved 9,200 of its 100,000 users to Microsoft BPOS since late March.

What could help Ballmer’s tenure is growing realization that the cloud pioneers have their own set of problems. Witness the Google/CSC mess in Los Angeles. And the Amazon Web Services outage.
 

Blake, importantly, is all about “cloud” in that he really doesn’t care what hardware is running where, or even what application is running or where, as long as he gets the performance, SLAs and billing he needs.

As for Cisco? Well, pressure on Chambers forced him to shutter the popular Flip video camera business. While Chambers built a credible server business (IDC numbers show Cisco with 9.4% share of the blade server market after just two years ), naysayers warn that the erosion of its core networking business remains a concern. And, now there’s a lawsuit alleging that Cisco, to win business in China, helped the government there track down dissidents. The suit was brought by the Human Rights Law Foundation on behalf of the Falun Gong.

This is not the kind of press any struggling CEO needs.

Let us know what you think about the story; email Barbara Darrow, Senior News Director at bdarrow@techtarget.com.

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CEO Steve Ballmer informed employees of this rather big piece of news in a posting today.

“Bob Muglia and I have been talking about the overall business and what is needed to accelerate our growth. In this context, I have decided that now is the time to put new leadership in place for STB. This is simply recognition that all businesses go through cycles and need new and different talent to manage through those cycles. Bob has been a phenomenal partner throughout this process, and he and his leadership team have the right strategy in place.

In conjunction with this leadership change, Bob has decided to leave Microsoft this summer. He will continue to actively run STB as I conduct an internal and external search for the new leader. Bob will onboard the new leader and will also complete additional projects for me.”

This news may unnerve die-hard Windows server loyalists as well as Wall Street, which has been critical of Ballmer’s stewardship of Microsoft. The departures of Robbie Bach, J. Allard, Ray Ozzie–all top tier executives–over the past year also raised eyebrows.

Muglia was often the public face of new server OS offerings, keynoting at TechEd and other Microsoft events.

It will be interesting if Muglia surfaces at another high-tech company. Bill Veghte, anohter highly-regarded Microsoft exec who left last year, is now at Hewlett-Packard, which is showing increased interest in software.

Let us know what you think about the story; email Barbara Darrow, Senior News Director at bdarrow@techtarget.com, or follow us on twitter.

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Some even speculate about a “draft Bill” movement to bring back co-founder and chairman Bill Gates as CEO. That may be wishful thinking by the cadre at the company that view Gates much like the Apple faithful viewed Steve Jobs, who returned from exile to “rescue” Apple with the holy iTrinity (iPod, iPhone and iPad.)

That seems far-fetched given Gates’ work with his foundation. He now has real outside interests, after all.

 The latest exec out the door in Redmond will be Ray Ozzie, Gates’ hand-picked successor as chief software architect. But Ozzie was preceded by Stephen Elop (a relative newbie brought in less than two years from Juniper ago to run the Office juggernaut. Elop left last month to become CEO of Nokia.) Robbie Bach, who’d headed games, left this fall after nearly 20 years. J. Allard, of X-box fame, also called it a day, although allegedly continues to serve as an advisor to Ballmer.

The natives at Microsoft are, indeed, restless about all these exits.

From Mini-Microsoft:

“…there’s been serious concern that Mr. Ballmer is clearing the executive bench at Microsoft. Or is it cleaning house? Since we’re unable to criticize any mistakes our departed leaders have made, it remains a big unknown.”

 Wall Street is not enamored of Ballmer who spent big on Internet search, Windows phones and other things where Microsoft has yet to achieve substantive market share. Given that the last quarter went very well  based on very strong sales of Windows and Office, one might think they’d give the guy a break.  (Microsoft’s profit soared 51% for the first quarter.) But not clear they’re doing so.

For its first fiscal quarter–the first full quarter of sales for Office 2010–the company said that division’s sales rose 14% to hit just over $5 billion compared to $4.52 billion for the year-ago period. The Microsoft Business Division also includes the company’s ERP and CRM software, but Office is by far the giant in that group.)

Windows led the company this quarter, with sales of the relatively new Windows 7 up 66% to $4.79 billion compared to $2.88 billion for the comparable quarter last year.

Still, for all that goodness, doubts around Ballmer’s leadership–and his huge gambles on Internet search and Windows phones– persist.

Here’s the money quote from  The Wall Street Journal.

“The coming quarters will be big tests of Chief Executive  Steve Ballmer’s big investments in new consumer markets. The company continues to lose money in its online services division, as its operating loss in the group widened to $560 million from $477 million in the year-ago quarter.”

There are even those who whisper about some other CEO replacement possibilities. One longtime Microsoft insider even dropped the “H bomb,”  speculating that Mark Hurd might be a suitable CEO-in-waiting for Microsoft. Hurd, as you may have heard, is co-president at Oracle Corp., after a profitable sojourn as HP’s CEO.  But as we all know now, for many high-powered execs, there’s nothing like the CEO slot. Does anyone doubt that Hurd wouldn’t jump ship if such a plum were proffered? 

Discuss amongst yourselves.

Let us know what you think about the story; email Barbara Darrow, Senior News Director at bdarrow@techtarget.com, or follow us on twitter.

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In a memo to staff posted to the company’s Web site, Ballmer wrote: 

“With our progress in services and the cloud now full speed ahead in all aspects of our business, Ray and I are announcing today Ray’s intention to step down from his role as chief software architect. He will remain with the company as he transitions the teams and ongoing strategic projects within his organization – bringing the great innovations and great innovators he’s assembled into the groups driving our business.”

 

Ozzie was named Bill Gates successor as chief software architect and strategist  nearly five years ago but his visibility diminished over the past year or so after the Windows Azure effort moved over to Bob Muglia. Even before that, when he was tasked with Microsoft’s mammoth cloud transition project, it was unclear how much muscle he really had within Microsoft’s famously contentious product groups when none of the group leads reported to him. Many said that structure was bound to fail.

Ozzie will stay at Microsoft during a transition–the length of which was not specified. And, ”before he retires from Microsoft, Ray will be focusing his efforts in the broader area of entertainment where Microsoft has many ongoing investments,” Ballmer wrote.

Microsoft will not name a new chief software architect, Ballmer said.

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Microsoft CEO Steve Ballmer was careful to claim that virtualization does NOT equal cloud computing. That’s what I would say too if I were trying to displace the VMware juggernaut. 

Ballmer also pointedly noted the need for smartphones that work well with existing IT infrastructure. As if IT has not scrambled to embrace the Apple iPhone and will not do the same for Android. No mention was made of the recently axed Microsoft Kin phone but Ballmer said the company will get the Windows phone right. Someday.

Also a few discrete jabs at other competitors…Ballmer said that no other company, “not Cisco, not IBM, blah blah blah”  offers the ability to boost productivity the way Microsoft does. He carefully did not include Hewlett-Packard and other  Microsoft allies there, but it’s not hard to see these two long-time partners coming to loggerheads more and more. This despite today’s news that HP, along with Dell and Fujitsu, will deliver Microsoft Azure appliances that will run in service providers’ data centers or at customer sites.

The Azure appliance–details of which were nebulous other than it will be out later this year–is one way  customers can run Azure in their own data centers and thus addresses one major complaint about Azure. Partners can support those customers or even run the services for the customer which is, indeed, a big deal. Amazon Web Services only run inside Amazon data centers. However they also are rationally priced (and cheaper than Azure) and let customers run on non-Windows infrastructure.

Looks like the converged data center has taken on a whole new front.

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#1: Why should partners go for the Microsoft Partner Network’s “advanced” badge?

The zillion dollar question this week is: “Why should we keep selling Microsoft stuff?”

Many Microsoft Gold partners beef that the price of keeping their  top-tier designation is going up at a time when they’re still gasping from the recession.

Microsoft has always touted its partner ecosystem. It has also always touted low-cost volume software. Those two concepts can be contradictory. There’s just not a lot of margin selling this software outright–but many VARs still rely on margin from product sales to fund their more profitable services work.

Going to the new “advanced” level requires a higher investment and a lot more paperwork. Will it be worth it? “Too soon to tell,” said one current Gold partner exec who is working on her advanced badge.

 #2: What’s up with Azure?

It’s not that people don’t believe Microsoft’s claims of 10,000 Azure customers. It’s just that the number ain’t all that high, given the investment and hype around Azure. And given the belief that many of these customers are one-off tire kickers. VARs said Microsoft needs to fix the pricing model, which is confusing to the point of incomprehensibility.

It also needs to clear up nagging questions about what’s under the covers with Azure while more companies deploy real applications and conduct real transactions on Amazon Web Services. It won’t help for Microsoft to explain that the Azure/AWS comparison is apples and kumquats. That would only remind app dev shops that AWS offers a choice not only of development tools but of operating systems. Oh, and if they want to deploy on AWS now and move to on-premises later, that’s a viable and supported option. Not so clear with Azure.

Check out the Azure primer Ray Wang published.

 #3: When will Microsoft sync up cloud apps with their on-prem versions?

Customers may buy into BPOS now but once they realize that the features they use in Exchange and SharePoint aren’t necessarily a given in BPOS there’s a lot of potential unpleasantness, VARs say.

 #4: Where’s Ray Ozzie?

The perception is that since Microsoft put Azure under Bob Muglia late last year, Microsoft’s chief strategist Ray Ozzie is MIA. Worse: that he was pushed aside. If true, that’s an odd fate for Bill Gates’ hand-picked strategy go-to guy. Ozzie is ostensibly working on social netty stuff, but really, where IS he? Microsoft continues to operate as (to steal one of its overused phrases) a bunch of pillars vs.  a company with a shared vision so many thought Ozzie’s position was weak early on because none of the heads of the cash-cow product groups reported to Ozzie. And politics at that company is a blood sport.

#5: Has the Google obsession paid off?

One could argue that Microsoft now fields credible online services thanks to its execs’ paranoia about the Google threat. The Google specter shook the company into realizing if it doesn’t get with the cloud program its Office franchise will melt away anyway. This way at least the company can capture some of those people. Oddly, given teh Kin phone snafu and the company’s continuing confusing phone story, the Apple obsession hasn’t helped much.

#6: Bonus: what will BPOS become?

Folks hate the name “BPOS.” More importantly, one person in particular–Steve Ballmer–hates the name and has ordered a new one. What will it be?

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What Microsoft lost in being late to the party–compared to Salesforce.com, Amazon, Google–it will try to make up for in hyper vigilance now. That’s why partners have already heard a lot about why they must sell Business Productivity Online Services–Microsoft hosted Exchange mail and SharePoint collaboration services.

They’ve been reminded that Microsoft is now “all in” the cloud per CEO Steve Ballmer.

At WPC, there will be sessions on why Microsoft Transactional Partners: Distributors, LARs, VARs should take an interest in Windows Azure, for example.  And others on selling cloud-based solutions. And many on BPOS.

Microsoft partners are already well aware of BPOS, the $10 per user per month mail and collaboration service that takes on Google Apps in the market. Some say Microsoft’s obsession with it–and pressure to push BPOS–might have had some unintended–and unwanted–consequences.

“We had our forced indoctrination on BPOS from Microsoft and by the time they were done. we all went out to look at Google Apps again, given the amount of energy Microsoft put into badmouthing it in their presentation.  More than half our team liked Google Apps better. I still like BPOS better and since we’re getting away from licensing [revenue] and moving away from the suite to the cloud, we’re taking a hard look at BPOS,” said an exec with a large Midwestern VAR.

Microsoft would very much like its partners to use BPOS as well. Last year it gave qualifying partners at WPC 250 free seats. Andy Vabulas, CEO of IBIS Inc., a Microsoft Business Solutions ERP partner, said his company will probably move to BPOS with the next release and may resell the services as well.

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As someone who doesn’t follow the vendor as closely as in the past, it’s still very clear that Microsoft has big “issues” not the least of which is that it lost its market-cap dominance to Apple, the most proprietary–and in some ways most user-unfriendly– vendor in tech.

The departures of Robbie Bach (who will retire in the fall) and J Allard certainly got folks’ attention. One Microsoft partner is anxious about the company, beyond the Enterprise & Device division, which is where Bach and Allard resided.

“I am very worried about Microsoft in general. [It's a]  comedy of errors, except not funny,” he noted.

On some level, who cares about market cap? And, executive exits at a company Microsoft’s size are to be expected — the company remains huge. But, the news is worth noting because it reinforces the perception that Apple’s commitment to slick design of premium products trumps. Microsoft’s habit of churning out ho-hum stuff. (Not that Apple is safe: Google’s Android phones are starting to kick the iPhone’s butt. But note that Windows Mobile (or is it Windows CE?) phones aren’t even part of the discussion. )

CEO Steve Ballmer used to talk about how much Microsoft listened, listened, LISTENED to customers and to partners and to developers–and he was right. The company famously over-researched every decision. It had charts and graphs an matrices and 8 by 10 glossies to back up each move.

But that listening has been in short supply lately. Ballmer’s kids famously could not use an iPod or an iPhone or Google search. He mock-stomped on an employee’s iPhone during a company rally. Seems to me that a little unofficial field research here might have come in handy.

The world mocked Apple’s iPad naming decision but it generated reams of free publicity as the feminine hygiene product jokes ricocheted around the Web. But “iPad” rolls trippingly off the tongue compared to Microsoft Office SharePoint Server.  Anyone want the soon-to-launch Windows Server 2008 R2 SP 1? Nope. Didn’t think so.

Naysayers once derided Apple’s iPhone as a toy, a lowly “consumer” product. Well, look how many Microsoft insiders and PR people carry iPhones versus the politically correct but underachieving Windows phones. And many of them use iPhones to access Exchange mail.

A few years ago, someone (ahem) wrote that MIcrosoft had become the new IBM, It had morphed into an old-guard, legacy IT provider dedicated to protecting its installed base as opposed to generating new products that people actually wanted to buy. Microsoft’s problem was that people upgraded not because they wanted the new products  but because they had to stay legal.

Talk of customer satisfaction faded away. Without knowing the facts of Microsoft’s patent infringement suit against Salesforce.com, you got to think this is a company that is becoming more prone to litigate than to innovate.

A long-time Microsoft Gold partner was disheartened by a recent meeting at Microsoft’s regional office. In the past, such confabs were full of over-the-top talk about “delighting” the customer, about customer service, about providing value.  The verbiage about innovation often verged on the nauseating, but at least there was some acknowledgement of the need to pay lip service to customer service. This time, he confided, it was all about selling stuff, and not stuff people wanted or needed. “It sounded like Glengarry Glen Ross in there.”

Don’t get him wrong: He wants to sell stuff. But he wants to sell stuff that customers actually have enthuiasm for, not something that they have to swallow as part of a rather distasteful Enterprise Agreement.

Microsoft is very much in trouble.

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