Sam Jadallah, vice-president, Organisation Customer Unit Microsoft Corporation, was in Australia recently to meet with Microsoft's channel partners and to review the local small and medium business channel strategies. He spoke to ARN's Molly Furzer about the reseller channel, the Internet, and Microsoft products on offer this year.
ARN: How does the reseller channel fit into Microsoft's small and medium business strategies?
Jadallah: Our strategy is very focused, we have a couple of very big assets: our developers, which write great software, and our reseller partners, which provide the services that help bring our software to life, to have meaning for customers. The channel is the only way; we don't sell direct. Our strategy is simple in that we maintain a tight loop between the two so that we can get feedback about how our customers are using our products, and that helps improve our overall developing process so that we build better products.
We are finding our channel partners are more competent in many other areas than we are. They know how to service, how to do installation, training, and custom application development. They are able to do the network and systems integration work to pull it together to provide a solution for a customer - that's why we are very reliant on our partners and why we invest so much. Worldwide we probably invest about $US400 million in terms of working with our partners, including the provision of technical information, training and programs.
ARN: What sort of feedback are you getting from the channel about the market?
Jadallah: We're seeing that basically across the board they are interested in a few key things. One is how they can help customers get onto the Internet and intranet. Customers are asking how they can implement internal networks and take their existing network and technology investments and turn them to the Internet.
A key area that we are very focused on with them is e-mail and messaging. Electronic mail is becoming the de facto way of communicating from business to business and person to person, even more popular than the telephone and a lot cheaper. So we're seeing quite a number of our partners spending resources focused on implementing very scalable, robust, secure messaging infrastructures, and Microsoft Exchange is the perfect solution.
ARN: How difficult or easy is it to sell software these days?
Jadallah: The software industry is still experiencing an incredible growth rate, our business is still growing fairly strongly - the Internet has changed everything. The challenge is really in keeping up with change more than it is trying to figure out new ways to use the software. We're seeing that the PC is transforming into many different types of PCs, from the home PCs to servers in the workplace and hand-held devices.
The big challenges that our resellers and partners are facing are centred around helping customers navigate change. We are absolute believers that we can take existing technology, PCs and software and help move that forward and capture the Internet. There is quite a lot of investment that people have already made into PCs and networks that they haven't even taken advantage of yet, and by making some minor changes you can easily do so. You can build an intranet very easily within an existing company without massive new investment. We'll help our partners with that. We'll provide them with the information.
ARN: In which direction is the channel moving?
Jadallah: Channel dynamics are changing, direct marketers are becoming stronger players, the whole distribution channel is really becoming its own thing and it's separating very rapidly from service. Resellers are becoming specialised and are coming together to provide a total solution to a customer. Resellers will partner with each other on a deal-by-deal basis or will develop relationships with a small set of other partners and they'll pull together for specific customers.
ARN: What products are going to be big this year?
Jadallah: Right now we have a very strong offering with Office 97 - as a platform it provides intranet capabilities right to your desktop and Word has browsing capabilities and allows you to create documents and work on the Web, making it very Web-enabled.
Windows NT and the whole NT platform market will grow in terms of networking along with Exchange 5.0 which we recently launched.
Exchange 5.0 is a very high-end messaging system that allows Microsoft to reach into small, medium and large businesses with a very rich and robust e-mail system. In this version we've added a great deal of Internet technology. For example, there is now Web browser access to Exchange. For the resellers who sell to small businesses we want to make sure we have a very tight, complete networking solution for them. We're very interested in talking to resellers who are doing any custom application work, who are primarily making money on Unix or Oracle platforms and other systems, and who are interested in how they can expand and grow their business with Windows NT and our platforms. So if they're out there and interested in growing their market, we're interested in talking to them.
An upcoming release is essentially Internet Explorer 4.0, code-named Memphis, which has a push mechanism and a notion of channels which allows you to take information from your Web site and make it live at your desktop. If you will, it brings the TV metaphor to your computer.
The Microsoft channel structure
Australia's equivalent to Sam Jadallah is Nabeel Youakim. Call him the Australian Microsoft channel man; as sales and market- ing director, Organisations, he looks after Microsoft's channel partners in Australia: Solution Providers, Certified Network Resellers (CNR) and sales partners.
According to Youakim, there are about 140 Solution Providers in Australia, comprising the highest tier in Microsoft's channel.
"Usually the Solution Providers are vertically focused - either they have some solutions they sell, be it manufacturing or accounting, or they are infrastructure people who install networks and messaging, usually to the corporate level and above," he said.
To become a Solution Provider, a reseller must have two Microsoft Certified Professionals on staff and pay an annual fee of $5000.
Youakim estimates Solution Providers in return receive between $25,000 and $30,000 worth of products, services and priority support lines.
The newest addition to the channel in Australia a year ago was the Certified Network Reseller program which has reportedly grown to over a hundred members focused on providing small to medium business solutions.
As Youakim described: "They're working with those organisations that see the benefit in using technology but don't really know how to get there. They don't have IT staff on board within the organisation so the CNR goes in there and becomes the IT component."
The CNR program costs $1000 to join and requires at least one Microsoft Certified Professional on staff. Youakim said CNR's receive beta and not-for-resale products that equate to six or seven thousand dollars in value, and also gain access to the services of the Microsoft Developer Network (MSDN) which provides technical information.
"We give many lead referrals as Microsoft gets many calls a day from people wanting to know who they can talk to about installing and supplying our products. Also, technical support is provided to both the CNRs and Solution Providers as well as a contact point within Microsoft so they can always get their customer's questions answered very quickly," Youakim said.
Youakim encourages all resellers to register with the free Sales Partner program, which he said provides a priority line answering resellers' questions and a monthly magazine which gives updates on product releases and new promotions. Sales partners are invited to tri- annual business briefings and are given the opportunity to buy not-for-resale products.
Tel (02) 9870 2200 Fax (02) 9805 1108