Microsoft Reorients Sales Strategy for Enterprise

With Windows 2000 and its line of .NET Enterprise Servers, Microsoft has signaled its assault on the market for enterprise systems. But winning in the enterprise market will require more than the 99.999% reliability that the company can finally boast. Microsoft is also planning wrenching adjustments in its extensive partner programs, its after-sales support teams, its elite corps of developers, its compensation structure, and its very culture. In an allusion to the conventional wisdom that Microsoft’s products reach maturity in their third release, CEO Steve Ballmer says the company’s new attitude toward the enterprise is “enterprise strategy version three.”

Ballmer unveiled some features of the new strategy in Sept. 2000, but the tactical realization of the new enterprise strategy will hit Microsoft this spring, as it goes through its annual reorganization and announces new corporate structures and licensing programs aimed specifically at enterprise customers.

Those changes will begin to turn around a current business model based on sales, through OEMs and partners, of high-volume, low-cost products that are updated frequently to drive upgrades and new business. This model is not well adapted to enterprise server and application markets, with their long sales cycles, extensive customization, and round-the-clock customer support. In the enterprise market, profits on software itself may be minimal.