Microsoft’s Software Without Service, The end of SBSC and Why you should never partner with Microsoft if you wish to run a profitable business.

The title in itself is my thesis. It is something that has been on my mind for years, but was prompted by this post by David Overton. I am of course not giving away all the details and secrets, as thats what you go to WWPC for and what defines our business value, but you can get the general idea of how we have been running and intend to continue growing our business in the future.

Last month Microsoft’s chief Kevin Turner introduced the Software + Service initiative. Allow me to sum up the strategy for you: “We hope to be where Google is today, in about two years”. Thats all there is to it folks.

The inherent evil in this strategy comes from Microsoft’s almost decade-bred megalomanic plan first coined Hailstorm that has over the years advanced through MSN, Live.com, Windows Presentation Foundation, Silverlight and now S+S. Again, for the sense of simplicity, Microsoft wants licensing (read: control) over every technology implementation used by computers and humans. They not only want the royalties but also control and direction management. They just need some stupid enough to sell it, it is the only missing piece.

Understanding Microsoft PM’s

Microsoft Product Managers are the folks that “own” the code and “own” the direction the product takes. These are usually quite brilliant people, with lots of dreams and ideas, like almost all other developers and strategists. When you have a dream, it is hard to let go of it. It is hard to go a day without thinking about it. So you try – and you fail. And you try again, and you try again, and you try again. You keep on trying until someone up high recognizes the potential, throws money at it and decides you’re going to be the next star.

Take a look at this blog post that sums up how software goes from concept to delivery and how many obstacles Microsoft PMs face.

Understanding how Microsoft is not Evil

Many (Linux / Apple / Mozilla) zealots hate Microsoft and often assign unfair criticisms to it. One of the local Linux guys is often saying, incorrectly, that Microsft is a “felon” that has been “convicted” many times, all of which is false, but in the same breath talks about how much he loves Google and Gmail and company that claims it is up to no Evil.

In my career, I’ve met Microsoft employees of all levels, from CEO on down to the guy that packaged the software on the Windows 1.0 assembly line, and I have yet to meet an “evil” person. However, Microsoft is not a company of employees, it is a publicly traded corporation with shareholders, stakeholders and greedy investors demanding more. Microsoft is also a corporation that has had more fines assessed against it for patent violations that nobody seems to mention in their articles where they try to guess how Microsoft will try to exert control over the entire world with their new “bs” patent.

So Microsoft, in its nature, is not any more or less evil than Google, they are after the same goal. They want the entire world to use their platform, their software, their solutions. They want to be the defacto . . . something. 

Understanding how Microsoft is Evil

Microsoft is evil in its business practices. There are tons and tons of articles you can read in which you see Microsoft destroying entire business verticals through poor software, key acquisitions, dumping the product for free to kill off competition and then either letting it die or making it very commercial.

Microsoft is evil in seeding developers on their platform. If you start a software company, Microsoft wants to be your best friend. They will send you tshirts, free software, free phones, free development tools, free training, free anything. Just for the love of god don’t look at the other, open, solutions because Microsoft’s closed ones are more reliable and secure. Besides, they own 90% of the market, how can you go wrong selling to that large of a crowd?

You go wrong by spending a year or two bringing your product to the market, just to see Microsoft cherry pick the solution and make it the part of the next release. Or they buy a competitor of yours, bring in the feature in-house and then by marking it a part of the product try to reach out to all of your customers and tell them to do it. They also have the balls to come to you, tell you to stop your development, and instead try to make a business out of implementing your former competitors solution and be an “integrator solution shop” – I am not joking.

Understanding how Microsoft and Google will kill the Small Business Specialist

SPFs/OMBs/Generalists are going to die.

Quickly.

I have said this in public forums before and have gotten attacked from every angle for sharing my knowledge and experience with folks. But allow me to explain what I know – as a mere CEO of a company with the largest cloud deployment of SBS and all its friends (Exchange, SharePoint, etc)

Cloud is sweet. It absolutely is. There is no way to fight with the cloud and win. Why? The cloud is cheap, its a low monthly fee that is predictable. The cloud is scalable, as a simple variable increase in the cost of the monthly fee you pay (Exchange Standard hosting = $10, Exchange Enterprise hosting = $15; Try doing that with a standalone on-premise server and it will cost you thousands and thousands of dollars in reprovisioning and infrastructure upgrades). Cloud, for the most part is more reliable than the onsite deployment, I also base that on our internal knowledge of the sites we manage in our data centers and our customers networks. Cloud is always evolving, always migrating – there is no defered upgrade, there is no migration strategy, there is no competitive exploration, there is no security software option – its just a monthly fee and one day you’ll wake up and the new software with new features will be staring back at you.

If you are an SBSC, your chances of pulling a customer from a cloud based monthly fee to a local, single point of failure, prohibitively unjustifiable infrastructure investment with hard limits for a company that may have a growth or consolidation plan are slim to none. Basically, forget about being a small business specialist in the cloud based environment.

No really, they are going to kill us.

Microsoft (and Google) spend a fair amount of time trying to assure us that there will be opportunities, that we can keep on consulting, that we can make money…

Truth is, they are after a referal at which point they can take over or reassign it to the lowest paid employee in the company. Take a look at Windows Office Live Basic hosting which is free. If you are a web hoster, developer, web designer, etc, etc – you are soon to be out of a job. Unless you are stupid enough to think that a small business will pay you $100 or more an hour to sit there and fill out web forms, be prepared to just advise the client where to go for their web site and enjoy your walk back to your car while you can still afford it.

That is very cruel but I did it for a reason, I wanted you to feel the contrast between the worst case scenario and best case scenario Microsoft and Google are pitching.

They aren’t liars (any more so than the average marketing folks) but they are there to kill us. Microsoft’s longest running line when talking to partners has been:

We have a solution you need to be excited about and sell to your clients.

Sell, sell, sell, sell.

Microsoft doesn’t sell software, our partners do!

My expense reports tend to differ with that, but I digress. S+S means Microsoft will be selling to the customer. Directly. As in completely bypassing you. You will be sold on the opportunity of developing some really high end stuff that most small business shops will never afford, but Microsoft will try to hit up the customer directly and hook their SBS box into their solution. Look at Exchange, you’d almost think its impossible to have an Exchange deployment without the Exchange Hosted Services, which are really neither but again, I digress.

Microsoft is actively looking for direct contact and only looks at you as the sales person. I hope you get comfortable with that, because Google, which is working on the same strategy, has no place for you at all.

Where they will fail…

Microsoft can’t sell to the consumer.

Microsoft sells to techies. Over 30 years of selling software to technology people, enticing technology people to talk to the business people and consumers and try to sell them on the latest Microsoft innovation. But when you look really, really hard, you find a sea of Microsoft failures at best (Zune), and open cash hemmorages at worst (Xbox) with pretty much a graveyard of flashy marketing in the middle.

But Microsoft will fail.

What Microsoft, it’s sales people, its developers, its PMs and others do not understand is that it should NEVER be called SaaS. Pointy haired bosses seem to say its all about the name. And they are right.

It’s saaS, bitches. Service is king.

If you want to see the SaaS failures, take a look at this post written by my dear friend in her time of panic. There is no service in the cloud. There isn’t even a phone number. Your intelligence, your data, your business.. can be wiped out as effortlessly as it was setup and you are just expected to live with it.

Until Microsoft, and Google, realize that it is all about SERVICE, they will continue to pile up large losses, customer disinterest, consumer freeloading and marginal success at best. Why? Because although customers buy the software, they buy it for a benefit. They buy the service. In Microsoft terms, they buy the Assurance in Software Assurance, assurance that the next release will be free. And when that doesn’t live up to its promise, customers end up pissed off.

So Mr. Gates… Steve… Personally I like you, professionally I wish you the worst of luck and an assured failure because you simply do not get it. Service is a personal connection, it is not just service because we say it is because we crossed off a bullet point on the requirements checklist and hired an indianinabucket.com to support it.

Service is care. And you are setting out to destroy, financially, the very partners that could help you with it.

Written by a CEO of a profitable saaS company. And thats about all the advice you get for free.

Now, if you aren’t pissed off at this (be it Microsoft, Google, SBSC or Steve Ballmer… you haven’t learned a damn thing. Read it again).