Microsoft to its hosting partners: Get ready. Here we come

At its Worldwide Partner Conference in Denver this week, Microsoft officials are trying to walk the tightrope when it comes to explaining Microsoft's plan to get into the managed services business in a major way.

Microsoft officials have made no bones about the fact that Microsoft is planning to offer a Microsoft-hosted version of services around all of its major products. Already, it's out there selling desktop-management, Exchange, SharePoint, CRM Live and other managed services.

At its gathering of 12,000 partners, company officials are attempting to assuage fears that Microsoft will simply steamroll partners who already are selling hosted Microsoft services.

Microsoft's message: Partners need to change. (The unwritten part: Or get the heck out of the way.)

At least in its official Partner Conference press releases, Microsoft is sugar-coating this message as best it can. In a July 10 Q&A on its Web site, Allison Watson, corporate vice president, Worldwide Partner Group, explains:

"With software plus services, Microsoft will be pointing its partners in a new direction. At the conference, we will outline a framework for how partners can participate and make money with this new opportunity, framing the monetization approach for how partners participate financially within the new software plus services model. As more products become available in the software plus services area, we will continue define the partner revenue possibilities for each....

"In the future, there will be a range of opportunities for partners to meet a range of needs. There will still be opportunities to resell, refer, add value through professional services, package with customized capabilities, and make money through annuities and subscriptions – all of this will remain true. However, there will also be abundant new opportunities for innovative, value-added services and customization as these hosted products roll out. We are also attracting exciting new partners who recognize the business opportunities represented by the breadth of our platform and the potential of the software plus services model."

Some hosting partners are counting on Microsoft targeting only the largest customers and leaving them the mid- and smaller-sized businesses. If history is any indicator, however, Microsoft won't limit itself.

Will hosting partners buy into Microsoft's messaging? Or will Microsoft's managed-services rollout be the straw that breaks the camel's back?