Still refining its partner program and awaiting the release of major new products at the end of 2005, Microsoft concentrated on whipping up partner enthusiasm for new product lines and for developing vertical specialties at its annual Worldwide Partner Conference, held in Minneapolis in July 2005.

"Build on Our Platforms"

Attended by a sellout crowd of some 6,500 partners, the conference featured few major announcements. Even CEO Steve Ballmer had no major products or programs to announce at his keynote address on the closing day. The centerpiece of that keynote, as of several other talks, came from partners who were invited up on stage to participate in panel discussions and question-and-answer sessions.

Microsoft focused primarily on encouraging partners to build vertical solutions on top of its Windows Server System and Microsoft Business Solutions platforms and to prepare for major upcoming product releases, notably SQL Server 2005 and Visual Studio 2005 (due toward the end of 2005), and the next version of the Windows client, code-named Longhorn and not due until the end of 2006.

Program Changes

The Microsoft Partner Program was overhauled only two years ago and, as expected, a few new tweaks were introduced at the partner conference.

Four new competencies—technical areas in which partners demonstrate expertise to differentiate their businesses and to move up the partner ladder—were added to the list of competencies. The specialties in Custom Development Solutions, Licensing Solutions, Mobility Solutions, and OEM Hardware Solutions bring the total number of competencies to 13. In addition, a new "competency-like designation," Small Business Specialist, was announced; with a lower bar to attainment, it's the first competency available for the entry-level Registered partner tier of the program.

New portals for partners include the Partner Learning Center, which makes it easier for partners to track their training progress and find training resources, such as Webcasts and online training; the Partner Marketing Center, where partners can find and customize marketing collateral and learn about marketing campaigns; the Partner Solution Profiler, where partners can profile their own solutions or services and locate partners with complementary services; and the Partner Vertical Resource Center, which provides tools and information for partners who want to move into vertical markets—a focus of many keynote speeches and other sessions.

Unlimited telephone-based presales technical support is now available for Certified and Gold Certified partners. Microsoft's own presales support staff will help partners close deals and counter competitive offerings.

Other Announcements

Partners will also get a boost from two licensing and sales changes.

Open Value, formerly known as Open License Value, lets small companies broadly license desktop software, similar to the way that Enterprise Agreements (EAs) operate for large companies. Within this program, Microsoft is now offering a small-business software bundle consisting of Office Small Business Edition, a Windows Small Business Server Client Access License (CAL), and a Windows Professional Desktop Upgrade. This bundle supplements the EA-like bundle previously available, which includes Office Professional Enterprise Edition and a Windows Server CAL. Microsoft has also simplified the ordering process for partners, who can now resell products directly to their customers. This eliminates situations where a partner would recommend the product to a customer, who then had to purchase licenses separately from a reseller.

A "101% Financing" promotion for partners kicked off Microsoft Financing's announcement that it will expand the range of software it finances. Financing was previously limited to Microsoft Business Solutions products but can now cover all Microsoft products, as well as third-party hardware and services that are part of the same sale. Partners who attended the conference will get 1% of the finance amount as a bonus for every financing deal they bring to Microsoft Financing before the end of Sept. 2005. (The new financing policies are described in more detail in "New Financing Options Offered".)

Services Strategy Explained

One of the more controversial issues facing Microsoft as it met with partners was its entry into the managed desktop services business, first evident in an agreement to take on desktop management for Energizer Holdings.

Many partners saw that engagement as the prelude to a new services business for Microsoft that would compete with services now offered by many partners, including some of Microsoft's largest global partners. But CEO Steve Ballmer and Worldwide Services Vice President Rick Devenuti said the engagement was intended to give Microsoft greater insight into the problems of desktop management, and will probably result in some formal desktop management service offerings that will be available to customers through partners. They denied that Microsoft had visions of a broad services business that would compete directly with similar partner services.

(More information about Microsoft's services strategy can be found in "Executives Clarify Managed Services Strategy".)