This party finds it very hard to understand how Microsoft keeps ISV partners and VARs happy. Microsoft has taken away market space from just about every major ISV and often with bruising and below the belt tactics. Moreover they continue to do so. And the names are major players like Novell, Corel, HP, IBM, Sybase, Sun, Adobe as well as hundreds of software players that have disappeared as Microsoft consolidated Project Management, Utility software, Office add-ons, and shortly BI markets on Windows.
But when you own 90% of the OS desktop, still 80% of Web browsers, 90% of Office Suites, 65-70% of mail services, and fastest growing % of OS server market share depending on who is doing the counting of what – maybe the ISVs just have to grin and bear it. Its not like they could easily break the stranglehold on say IEs browser market share. And heaven forbid contemplating any change to the Office dynasty.
The VAR Factor
Likewise life as a Microsoft VAR seems to be just as bad. Microsoft yanks chain on a number of fronts. Poor support and backup during the rotten days of reliability, scalability and now security problems. Constantly changing and even more rapidly obsoleting application solutions. Just look at the Windows line up in the past 10 years- brutal retirement of Win 3.x, mercifully quick phase out of Win 95. But .NET was not ready yet still forced out NT 3.x and most of the 98s. XP and security problems quickly did in the NT 4 and the last of 98. Now Vista and XP2 are retiring Win 2000. And we have not whispered about Office, VB, Exchange, and at least a dozen database access methods.
But Microsoft argues that it is a good proposition because it does not compete with its VARs like Oracle, IBM and other major vendors (and the Open Source community whose only revenue is the same business of support plus service that VARs are into). In addition, for every dollar of Microsoft revenue there is $6 to 7 dollars of value added revenue available to VARs. What is not mentioned is the razor thin margins on those revenues. Nor the VAR as first line of contact flak catchers for sometimes very unpopular Microsoft Software Assurance plans and missing support (see above for major instances). What Microsoft (and other vendors too) offer is the rolling new technology brass ring. Be in on the promotion and development/delivery of new technologies and there are some new venture discounts and start-up margins that can bring very good returns for what seems to be an ever shorter while. So perhaps the Lottery ticket plus early 1990s stories of big payouts keep VARs on board.
But it is the start-ups and entrepreneurs, that are hardest to understand. These are hard-core, after the Brass Ring, type A personalities who should know that VC is a very hardball often zero-sum game => “I win means everybody lese has to lose”. So I find it very hard to believe that Microsoft would have success in this market place. But here is some Redmond VC fronsters trying to pull in some Web 2.0 action for 1 Microsoft Way. I wonder if the turnout will be the same as for Computing Science in university enrollments these days ?