Microsoft headed for a services show-down with its hosting partners

Summary:During the past couple of weeks, Microsoft officials have started touting publicly the handful of hosted managed services that Microsoft is selling directly to customers. But what does Microsoft's managed-services plan mean to companies that have built businesses around selling hosted Exchange, SharePoint, SQL Server and other wares for the past few years?

Microsoft is on a collision course with its hosting partners.

During the past couple of weeks, Microsoft officials have started touting publicly the handful of hosted managed services that Microsoft is selling directly to customers. This week at the NXTcomm 2007 show in Chicago, Microsoft is out hawking its "Microsoft Solution for Hosted Messaging and Collaboration," "Hosted Microsoft Dynamics for CRM" solution and "Microsoft Solution for Managed PC."

These three services are just the tip of the iceberg. Earlier this month, Ron Markezich, Microsoft Vice President of Managed Solutions, said Microsoft is looking to build and support a Microsoft-hosted service component for almost every one of its software products. Next up are a Microsoft-hosted business-intelligence solution and some kind of Microsoft-hosted SoftGrid application-virtualization offering.

Currently, Microsoft only has four corporate customers for these managed services. But in the coming months, Microsoft plans to turn up the marketing heat on its hosted wares.

That's not the best news for businesses which have carved out a business for themselves over the past couple of years selling hosted SharePoint, hosted Exchange and hosted SQL Server services. Now these telcos, integrators, resellers and managed-service providers will be competing head-to-head with Microsoft to sell hosted versions of Microsoft's software.

The clash between Microsoft and its service partners could come to head in mid-July at Microsoft's Worldwide Partner Conference (WWPC) in Denver. At that show, Microsoft is offering a number of sessions designed to attract more partners to sell hosted versions of Microsoft's unified communications and security wares. "Add a New Revenue Stream: Selling a Portfolio of Hosted Services" is the title of one WWPC session. "Managed Services? Building a Sustaining Business Model to Succeed" is another.

Markezich told me in early June he was well aware that he could face a tough crowd at the WWPC. He pointed out that Microsoft currently has a "very small sales team" selling Microsoft-hosted versions of these services. Microsoft is relying primarily on its dedicated acount executives to let customers know they can buy these services directly from Microsoft, he said.

"I do talk to partners quite a bit about this (Microsoft's entry into the managed services market)," Markezich said.

One way Microsoft is hoping to lessen channel conflict with its partners in this space is by convincing service providers to embed Microsoft's managed services as part of their larger managed/outsourced datacenter offering, Markezich said. He noted that Siemens Business Services is doing call-center and desktop support for Energizer Holdings, the first customer Microsoft signed up for its managed services pilot a couple years ago.

"Migration and transformation work is also a good place for partners" to sell managed-services solutions based on Microsoft products, Markezich said. And in cases where "customers want servers on premise (but would prefer someone else to run them), we send them to partners," Markezich added.

Any partners out there worried about Microsoft's pending encroachment into the managed-service space? Customers using managed services: Would you rather have your hosted e-mail managed by Microsoft or an independent partner?

Topics: Microsoft

About

Mary Jo Foley has covered the tech industry for 30 years for a variety of publications, including ZDNet, eWeek and Baseline. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008). She also is the cohost of the "Windows Weekly" podcast on the TWiT network. Got a tip? Se... Full Bio

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