This year’s MTV European Music Awards had everything: slinky supermodel presenter Heidi Klum, swathes of preposterous pop stars, and, er, an enormous Windows 8-powered video wall. Keen to suck up any excess stardust, Microsoft provided the screen to show what was happening backstage.
The operating system’s appearance at the event this month is part of a glitzy marketing campaign featuring Aussie songbird Lenka and a string of gloss-coated ads revealing gorgeous Americans doing amazing things with Redmond’s new software.
But as for the distribution channel here in Blighty? Well, we got a bus.
For the next few months UK distributor Westcoast will send a black double-decker decorated with Microsoft Windows 8 tiles hurtling around the English countryside to educate and enlighten resellers about the benefits of Windows 8.
With Microsoft focussing on consumers, not to mention efforts to capture cloud computing and sell software as a service, some dealers fear they could be shoved to the back of the bus or simply thrown under it.
One of the double-decker’s first stops was Bechtle Direct, a reseller based in Chippenham, Wiltshire. To say it was greeted by wildly cheering, confetti-throwing sales people would be a bit of an overstatement. But it was certainly welcomed.
The bus is loaded with desktop, convertible computers and tablet hardware from vendors such as HP, Samsung and Toshiba, all running Windows 8. Richard Gibbons, Bechtle’s software sales manager, said it was a “hugely useful” visit because it provided the company’s sales team with hands-on experience of Microsoft’s new operating system.
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As a Microsoft reseller house Bechtle has a clear interest in seeing Windows 8 take off.
“I’m a big fan from a user perspective,” said Gibbons, adding, “Every single business customer I have shown it to is impressed. I think enterprise sales will be quite significant and in the long-term the number of adopters are going to be quite impressive.”
Culture change versus Windows XP loyalists
Part of the pitch to those adopters is that Windows 8 represents a cultural change – a move towards touchscreen computing, which those familiar with iPads and such tablets will embrace readily. Using this logic, and with 80 million iPads shipping a year according to industry analysts Freefrom Dynamics, Windows 8 could enjoy a warm reception.
However, there is also a large installed base of Windows XP, an operating system that is 11 years old and stable. And many companies are still upgrading to Windows 7.
Funded mainly by Microsoft, the Westcoast double-decker team tacitly acknowledged this by dishing up comparative business and sales guides. These are designed to help resellers prise open the doors of clients still running XP, and explain how to sell Windows 8 as a mobile OS to clients happily running Windows 7 on desktops.
But it’s the mobile element of Windows 8 that many in the channel are relying on to drive sales, particularly business-ready tablets. Zak Verdi, director at Software One, boldly stated: “There is a lot of pent-up demand. People are holding back on hardware refreshes because they want Windows 8.”
Microsoft has been emphasising the mobile side of its new operating system in a raft of webinars, seminars, in fact all sorts of “ars”, all designed to showcase its benefits. There’s an air of optimism that Microsoft may become a realistic player in the mobile space, which in turn is going to generate new revenue streams for the channel.
However, this may be based on hope rather than hard-nosed business expectation.
<p“There may be a general air of optimism because the channel is seeing a huge interest in tablet touch devices,” said Alastair Edwards, principal analyst at Canalys, “but enterprises are very cost conscious these days and will be reluctant to move to a new operating system too quickly.
“Windows 8 is a radical shift, it’s not just a question of embracing it as part of a natural upgrade cycle. There will be significant training costs. It will take time for it to penetrate and many companies will hang back to see what the experience of early adopters is.”
Beyond sharing basic technical knowledge, certification and competency programmes, for now Microsoft is not offering the channel much to work with.
“There’s a huge amount of consumer advertising but Microsoft has a bit more communication to do with the channel,” said Andy Buss, service director at Freeform Dynamics. “There is some support to help resellers identify opportunities on a case-by-case basis but at the moment most of the marketing bucks seem to be going towards the OEMs [original equipment makers] to ensure that they are developing a better class of device for Windows 8.”
Certainly, computer makers are expecting accelerated Windows 8 hardware sales – next year. Michael Keegan, managing director of Fujitsu Technology Solutions, pointed out that the company already has a number of Windows 8 computers that are essentially new, light and more powerful form factors. He expected these to bolster what have generally been “weak sales in the channel in the last three to six months”.
He attributed that to customers holding back on technology refreshes but believes Windows 8 will help accelerate sales: “Microsoft is no longer a monopoly but… with the launch of Windows 8 it is in a much stronger position. It needed to be in the mobile form factor space and the new operating system places it firmly there.”
‘Microsoft will get it right by the third version and I’m sure they will. By the third version.’
To date, selling mobile devices to businesses is the preserve of specialists who focus solely on gadgets and software, and little else beyond that. Windows 8 provides a traditional reseller with an opportunity to carve out new opportunities: if customers pick up a few Windows 8 tablets and warm to the mobile-friendly OS, a door to future deals on Redmond-powered smartphones is thrown open.
As a result, some believe Microsoft’s upcoming Surface Pro laptop-cum-tablet will be sold purely through the distribution channel, and thus could be an opportunity for dealers to bolster revenue streams, particularly as the hardware will run applications users are familiar with. This contrasts Microsoft’s decision to sell the Surface RT itself right now.
So far existing tablets haven’t cut the mustard at the enterprise level. Many users thought they could do away with their clunky laptop and just use an iPad when out and about. However, in terms of business functionality, the Apple fondleslabs are lacking and users have found themselves carrying both an iPad and a laptop.
In terms of the actual Windows 8 launch there’s a perception that it’s the “same old, same old” from Microsoft.
“As usual, Microsoft is concentrating on pulling in revenues first. There’ll be lots of problems with Windows 8 for sure, but it will go back and deal with the issues after they arise,” said one reseller. Another added: “There’s the old saying that they’ll get it right by the third version and I’m sure they will. By the third version.”
This view informs an understandable reservation by some channel partners. For example, Gordon Davies, chief executive, Adepteq is guarded: “There’ll be a lot of adoption on paper from existing licence customers simply because when other OS licenses are renewed Windows 8 will be part of the deal. However, in terms of actual hard adoption that will come later when hardware refreshes take place. We’re expecting this later in 2013, towards the end of the year.”
By placing emphasis on consumer marketing, and ensuring the hardware meets its requirements, Microsoft aims to capitalise on the rush to new mobile form factors.
However, putting the mobile element of Windows 8 to one side, there is discontent in the channel towards Microsoft that has arguably been exacerbated by Windows 8, in part because the OS is an innovation too far.
Touch tablets are too big to swallow
One reseller pointed out that for some time it’s been crystal clear that while Microsoft is saying all the right things about the importance of partners, its actions are taking it in the opposite direction. Windows 8 could actually drive an even bigger wedge between partners and the software behemoth, particularly in the small-to-medium biz market.
“You fire up Windows 7 and can quickly find your way around it. Do the same with Windows 8 and you spend two days wrestling with it in order to understand it,” said one resller. “If I send some new computers to one of my SMB clients with Windows 8 pre-loaded I know they’re going to return it to me. They want a computer to work with. They don’t want to spend days trying to figure out how it works. It’s a disastrous product and is a really good excuse to get rid of customers.”
Resellers think it may be too optimistic to assume Windows XP users will leap to Windows 8 when XP’s 2014 end-of-life deadline approaches. Microsoft appears to be pushing this line at the moment, as evidenced by its sales and business “case-by-case” advice to the channel to persuade clients to move to Windows 8.
Freeform’s Buss is in the “not sure” camp on this point: “It’s a big jump from XP to Windows 8. Some people will make the leap if there is a real need but many will simply move to Windows 7. Based on past experience we would expect a slow take up of the new operating system and for a few years we’d expect adoption to be modest with many companies hanging back.”
Despite Microsoft’s soothing noises to the channel, the Redmond giant is also promoting a scaled down version of Windows 8 for direct download via the cloud, underlining its aim to become a “devices and services company”. This, of course, means eating into resellers’ revenues. While resellers who operate at the enterprise level may adjust to these shifting winds, those who concentrate on the much larger SMB sector are troubled and concerned.
Direct downloads sidestepping partners
One reseller said: “This is part of a larger shift away from partners. Microsoft has been removing products that we used to sell for some time. Offering Windows 8 as a direct download is just one more step in the direction it wants to go. Of course, Windows 8 offers opportunities in mobile computing, but the company is still moving away from partners.”
However, Microsoft’s success in the cloud to date is relatively modest. Canalys’ Edwards pointed out there has only been a small uptake of Microsoft Office 365 via the cloud and this is symptomatic of slow uptake across the industry. SAP, for example, has attributed only two percent of sales to the cloud.
Edwards said: “The adoption of cloud-based services is around business processes such as HR and payroll and individual users accessing consumer type apps. Businesses want to leverage the benefits of the cloud but they also want users to have access to the same apps when they’re not connected to the web. There’s certainly not going to be 90 percent uptake in the next five years. It will be much slower than that.”
For now, the channel is aligning itself with Windows 8 due to the new mobile opportunities it promises next year and beyond. However, there’s also the understanding that Microsoft, while still a big and powerful company, is no longer the sole king of the hill.
Its relationship with the channel is best summed up by the comment of a SMB reseller: “Microsoft is clearly moving towards a service model. However, so is everyone else. As it begins selling more products directly resellers will have no choice to turn to alternative products which are becoming increasingly popular. Windows 8 will keep us interested for now, but Microsoft’s actions are undermining its partners which means that ultimately it will undermine itself as we go elsewhere.”
So if you do see that black double-decker bus careering along some mist-shrouded lane you may want to whip out your smart phone and take a picture for posterity – although you’d probably prefer a picture of Heidi Klum.