Microsoft Gets Advice from Wal*Mart?

November 28, 2007 – 11:37 am

lucyvanpeltWell maybe they didn’t get it from Wal*Mart but I’m sure it was worth all of the 5 cents they must have paid.  The advice was that that they should turn powerful and effective technology for driving a small business into a cheap commodity by delivering it through companies like Comcast whom will actually give it away for free to close a deal (see this post and this post for more on the MS and Comcast deal).

The reality is that they should pay whomever gave them the advice with a big fat check with lots of zeros as it works great.  Wal*Mart, Home Depot and others prove everyday that there is a do-it-yourself, buy it for less regardless of quality, jump over a dollar to get to a dime shopper that has no value of their own time or that of professional services or speciality shop.  The sad thing is that these shoppers are not going to be innocent individual consumers that will never see the recall notices on the lead tainted toys, these are young entrepreneurs setting out to live the American dream.  These are people who make up over 80% of US businesses.  These are people pouring all there time, energy and often life savings into starting a business against the odds in hope for a better life than the cubical they left behind.  These people are the true back bone of the American economy! 

Why do it think that the products/services (lets just call it Software as a Service or SaaS) produced by MS and sold by Comcast will be such a bad thing for small businesses - and ultimately America?  Should I not be thanking them for providing a cost effective solution for small businesses to get started with?  Hell no!  If there is one lesson I’ve learned in business is that it is usually ten times cheaper to do it right the first time they to save a few bucks on a short cut.   I started Charlotte Tech Care Team 7 years ago to save small business owners from their own worst enemy - the lack of good strategic IT advise.  I’ve learned from my prior startup that there are really four areas of business practices that that can put you out of business when given bad advice.  They are legal, accounting, HR and IT.  I’m not very good at the first three so I pay specialists (you know, the trained, accredited and certified kind) to help me in these areas and I pay them well.  I’ve never thought about asking Office Depot if they would help me with employment contracts or asking Intuit if they would help me with cash flow projections.  Why, because at the end of the day they don’t care.  Really they don’t.   I’m just another small business customer to them and count for an immensurable portion of their revenue.  I pay professional firms for advice when I know they care about the health of welfare of my business. 

I started my firm to help small business owners succeed in the only way I know how, by caring for their technology need as well as their bottom line.  How does MS and Comcast plan to replicate that?  They don’t!   Unfortunatey there are to many innocent and gullible startup business owners out there that having been overwhelmed by the cost of starting their business, are going to take up Comcast on this offering.  They  hope it will solve all their IT needs and will never get the chance to engage an IT firm to give then the other advice they desperately need, but don’t know they need.  

Recently a MS employee explained to me the following about this deal:

This partnership looks to me to be very similar to deals struck with CompUSA, BestBuy, etc. It?s an attempt to reach the lowest of the low hanging fruit ? the small customers that SBSCs and other partners don?t reach. My hope is that there is little conflict created here for you and other SBSCs, in that your level of knowledge and ability to help customers make good decisions will always win over a menu provided by a couple of huge restaurants (us & Comcast). I?m guessing that most customers that would take this option aren?t ones that you?d want to start with. I know that in the newer SaaS world this is more blurry, but I?m hoping this falls along the same lines as a customer that wonders why you?d want to install a server when they have perfectly good Yahoo! Mail (Comcast target) vs. someone who sees the value in having a relationship with their provider beyond their monthly bill (your target).”

While I believe all that to be true, I still don’t like it.  Why?  Not because threatens me. He is right, I don’t want customers that won’t pay for good advice.  I just believe that it’s the wrong thing to put out there and it’s the wrong thing to be teaching small business owners.  They trust the MS brand.  Or at least we want them to trust it, but this move will lower the expectation of the customers in the same way  Wal*mart has taught people that it?s OK to buy junk since price is all that matters.  Wal*Mart achieved it greatest growth during a down economy.  Why do you think that was?  Does MS really want to adopt the same business model just to compete with Google Apps?  When people start using the term ?You get what you pay for? when talking about a Microsoft product how will that make you feel?

Exhibit A - I received the following from a customer with a great business plan that is just getting traction and was shocked by the price of moving from ACT to Sales force and wanted to consider some alternatives.  I of course proposed much more affordable and very intigrated solution run on a hosted virtual Small Business Server with mostly MS products.  Here is his thinking.
“With respect to the file storage / sharepoint set up, let’s price that by itself too— Not sure if you saw it or not, but yesterday Google announced a new service it intends to roll out the first of the year with a data storage service—docs, images, photos, etc… could be perfect (and nearly free) for our FTP / storage needs—so Sharepoint may not be necessary.”

I may be able to convince him of the value of going with the solution I think is best for him but companies like Google and now Comcast and Microsoft are making that harder. If I fail to get him on what I know to be the right solution for him, he may fail.  He is one of many that may become I trend that I don’t want to see.  Do you? 

Vlad pointed out that big business likes doing business with big business.  While this is true, the consequences of their inattention to the subsequent ramifications of their decisions is usually obscured by the dollar signs in their sparkly eyes as the ink drys.  Technology services like the ones MS has chosen  to deliver through Comcast are mission critical services and should NOT be delivered by company not capable of delivering it responsibly.  The really frustrating part is that MICROSOFT ALREADY KNOWS THIS!   Microsoft has been a partner driven company since it’s inception because they know who the customers trusts.  Why now do they choose to blur the lines with these types of partnerships?  Are they getting business advice from Michael Dell himself?

As not to be all doom and gloom here is a suggestion sent by one of Uncle Bill’s nephews.  “Targeting a lower segment of a market almost necessarily pulls down the value of the market just above. We really should have SBSC & we?ve gotta guy messaging built in to this whole thing. If nothing else, it would have looked much more cohesive and compelling, even if the Wal*Mart analogy still hold.” (thanks Tom)

This week Citigroup announced it will be borrowing $7.5 billion from Abu Dhabi to help protect against planned future losses.  My customers don’t have the luxury of borrowing from Middle East or Eastern interests to recover from poor judgment and questionable business decisions.  Do yours? 

While this Comcast thing is a done-deal lets all commit do making it fail.  Not in spite, but in principle.  Let us do it by reminding our customer and prospects and especially each other that we are in a value-add services business.  While we can’t stop the continued commoditization of SaaS, we can remember our role is to guide those that value our knowledge and insight.  Let not become mindless conduits of SaaS!  Let’s give American startups the services AND guidance they need to succeed.   To sound cliche, all of our futures depends on it!

  1. 4 Responses to “Microsoft Gets Advice from Wal*Mart?”

  2. Hey Mark,

    Funny, I watched Charlie Brown Christmas last night with my wife and kids… :-)
    I’d love to hear your thoughts on this post of mine:

    http://blog.metricz.com/2007/08/saas-and-the-channel-what-now-what-next/

    Its very much in line with what you are saying regarding the IT service providers’ need to NOT be a mindless conduit of SaaS. I totally agree, and if you take a look at the above mentioned post (along with the others I link out to), I think you will find some very good food for thought.

    Again, I would really love to hear your thoughts, as well as the thoughts of some of your readers.

    Thanks as always

    Jesse

    By Jesse Kliza on Nov 28, 2007

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