As you know Google has been eating Microsoft’s lunch in the public sector almost as bad as Apple has been embarrassing them in the arena of public perception with the Mac vs PC ads targeting Vista’s “perceived shortcomings” (You have to admit that those ads are funny!). Neither one is yet dominate among SMB or retail consumers but the battle for market share is setting a stage for a real all out turf war.
Today I had the privilege of sitting down to the table for a two hour lunch and very “transparent” conversation with Microsoft’s Corporate Vice President of US Small and Midmarket Solution & Partners Group, Michael Park and some other local MS Partners. You can bet both the Mac ads and the battle for SaaS were topics I was anxious to discuss.
While Michael shared about Microsoft’s vision and marketing strategy we all appreciated how candid he was about some of their shortcomings both with the partners and with their marketing efforts in targeted areas. At first the Dynamics Partners got into conversations that showed off Michael’s MBA from Harvard and left my little old ME mind spinning. They talked about things like “mapping the capacity relative to the opportunity” or something like that. ;-) Then came the good part as we discussed SaaS and where MS sees the market trend, our role and their role. I won’t recount the entire conversation but I’ll share the part that I know is of the most interest to my 7 readers. The part where Microsoft signs Comcast as a SPLA partner thus allowing them to deliver hosted Exchange for free to SMB customers.
After Michael explained that the acquisition of sockets (MS platform adoption by end users) was MS’s primary goal in their Office Live and SaaS strategy I asked if that was the reason for singing the SPLA deal with Comcast. “Yes” was the quick answer. I asked, “Is there any concern that allowing a company like Comcast to attempt to deliver a personal service would lower customer expectations (see this blog for more on that) and what would happen to any up-sell opportunities from those SMB customers?” While he didn’t answer either of those questions directly he went on to explain how it was a stratigic move in preperation for an all out war - the ultimate battle for platform domination that is destined to occur in the Web 2.0 and SaaS prevalent world of tomorrow. Let me share the battle plans as I now understand them.
The Battle Fields: The retail/home consumer market then ultimately SMB desktop, server and Software as a Service preferences.
The Prize: Consumer and SMB platform preference for hosted applications that will generate billions of nearly effortless recurring revenue and valuable Web 2.0 real estate ripe for advertising.
The Stage: Microsoft has spent $20,000,000,000 in the past 18 months in R&D and tens of millions of dollars marketing Office and Vista this past year only to succeed in the enterprise space, yet lose ground with SMB and home consumers. The reality is that what ever SMB consumers feel comfortable with using at home, they ultimately trust at work and right now consumers are happy with XP except when straying towards Macs (I guess to scratch a creative itch when they get home from the PC filled office). SMB adoption of Vista is pathetic and those consumers are being tempted by the low cost and convenience of Google Apps hosted communication and collaboration tools. The public sector market has been particularly vulnerable to Google’s allure.
The first part of Microsoft’s two part battle plan is mass marketing efforts (air cover) in early 2008 to drive “home users” to Vista, Windows Home Server and ultimately the Live products that integrate so well with the two and provide long term stickiness. They will accomplish this by spending a fair chunk of their war chest on very strong media ads that Park says “will focus on consumers to dispel the misconceptions about Vista and launch a direct attack on Apple and XP”. “The growth starts at home” he finished.
The battle plan for the SMB space, while leveraging the momentum expected from the home user marketing, is much different and very tactical. The goal of the the SMB War is to “secure the platform and this must be done through trusted advisors to the SMBs” Park said. Microsoft is working VERY hard to amass an army of Small Business Specialists (SBSCs) armed with a secret weapon Google does not yet have - the trust of the small business owner earned through a person to person relationship that brings value-added guidance to the other key needs of their business. The SBSCs are being rallied right now and armed with the tools they need to help small business succeed. Every small business needs bandwidth (Comcast is just the first, TWC is not far behind), Hardware (new SBSC deals with D&H and CompUSA), phones (enter Response Point), a bank (sorry, can’t comment here), an attorney (not sure on the plan here), office supplies (again, can’t comment) and an accountant (MS Accounting Network). Throw in a payroll service and a shipping company… What more do you need?
The success of the SBSC channel has already proven to be a success with 4x more sales growth than equivalent non-SBSC partners and now Microsoft is arming the them with allies, benefits and co-marketing relationships that should make them more than conquerors.
As an SBSC PAL I must commend Microsoft on an excellent battle plan. I’ve been a first party to some of the war room talks and can tell you the SBSC alliances being formed are many and strong. The SMB IT Pro community has seen Microsoft’s commitment to them through the SBSC initiative and is really starting to get behind Microsoft (as long as Microsoft stands behind the community).
The battle is coming to “secure the sockets” and Microsoft has a strategy to mobilize and arm trusted advisors to meet Google and Apple at the SMB battle front. My question to you is where will you be during this battle and are you even an SBSC yet?