Just finished reading Paul Quickendens blog entry at CloudAve – make no mistake, I do agree with many of Paul’s points and arguments, but I have to ask myself: Why wouldn’t Microsoft go to Cloud Computing and is this so wrong?
At first – let’s go back and address some of Paul’s points. As started in the Innovator’s Solution and Dilemma; companies cannot disrupt themselves within. But looking at Google, Netsuite, Salesforce – for a long period Microsoft’s old traditional business model have been disrupted. We faced nearly a whole generation, where Microsoft grew their market share, and stood as sole provider of killer applications. Basically we have to respect that Microsoft is a public company – focus is to build shareholder value and capital. And normally; we are human beings – and therefore reluctant to change… in five years time we have adopted the status quo.
So is Paul wrong? Definetly not! When a senior Microsoft official use a term like “they are going to Creatively Disrupt themselves”; you better think hard whats going on. Clearly some fragments of the Corporate structure is challenging the Partner model. It is not totally odd as Bill Gates left the company year ago, and the newcomer Kevin Turner is rumoured to be a hard nut against suppliers, partners and vendors in Wal-Mart. Ron Markezich with his remark made it clear, that some parts of the Microsoft partner sphere is going to perish.
For Microsoft the marketing phrase is; Azure and BPOs is for the partners. And with partners Microsoft address the independent software vendors (ISVs) and Systems Integrators (SIs). Basically Microsoft cannot deliver value with either Azure or BPOs without these Partners. As coming up from the hosting channel in Europe the last 9 years, I can only see what Paul’s is addressing as the partners whom invested heavily in driving the partner hosted business models, have to give room. But we, as providers of services can still capitalize on the marketing terms – although we are much closer to fail, than succeed.
So – conclusions. If Microsoft does not invest in this, another channel will arise and Microsoft will be disrupted. If Microsoft does invest in this, they will attack parts of their own partner channel but hit the opportunity. VMWare is going to serve the market, Google is there and Force.com is pushing hard. Have we seen the winner? No. We have seen the beginning to the end of this era – but you as a vendor, partner or customer have to build upon new choices. I strongly agree with Paul’s view – Microsoft would have won more hard and feelings by helping existing partners compete against their competitors. Reality is that Cloud Computing is a $42 billion market opportunity – today around $9 billion. Microsoft will compete against their own channel of those $9 billion (call it compromise their existing revenue), but also bridge the gap towards the $42 billion. You have the same opportunity – although investment sums are probably somewhat different, and unfortunately Microsoft is cause many partners to hold back investments that would be beneficial to all parts.
Paul – thank you for spinning the entry, and some thoughts.