A Live opportunity for the channel?

Earlier this month Microsoft announced it has begun work on two Internet-based services it will host for delivering software. The response from the channel has been silence.

That’s understandable because details of the Live Software initiatives which will start sometime next year, have been vague and seemingly have no VAR benefit.

What we know is that Windows Live isn’t an operating system, but Microsoft-delivered service aimed at helping consumers build home pages that include calendars, e-mail, instant messaging and information management. Office Live a Web site for small businesses (fewer than 10 employees) to set up home pages including e-mail (five accounts) and instant messaging solutions. Both services will be offered free, but with a catch — the Web sites will come with advertising.

Should the channel yawn or see a revenue possibility?

“I think there is opportunity,” says Forrester Research analyst Kyle McNabb cautiously, “but it’s unclear what it is.”

“It’s too early to say what the real benefit to VARs is.”

But he and other industry observers say the initiative is an important signal of how Microsoft is shifting part of its go-to-market strategy. And that is something every partner of the company should pay attention to.

To these analysts, these new online services are the way Microsoft will dip its toes into the waters of delivering software as a service. It’s a broad concept that has many definitions, from salesforce.com’s pay-as-you-go subscription to buying software features online when they’re needed instead of buying new versions every couple of years.

Microsoft has been trying to deliver online services to small businesses since 2000, when it announced a project called Hailstorm that was met with a hail of objections from privacy advocates.

Initially, at least, observers think Software Live will try to head off Google and Yahoo as home pages in the hearts of computer users. After all, Microsoft has too much invested in client-server computing to give it up. And so far, Software Live doesn’t offer word processing or a spreadsheet.

But in a report Gartner analyst David Mitchell Smith also suggests one of Microsoft’s aims is to get computer users accustomed to paying a monthly fee to it for services for different products.

Gartner believes the expanding use of Ajax (asynchronous JavaScript and XML) technology is moving the Web towards rich online capabilities for certain functions, while at the same time leaving client-server computing to focus on its true value, offline capabilities.

VARs and service providers who want to offer small companies basic Web portals and e-mail may very well see Office Live as a threat, says McNabb. “But it’s also an opportunity. If Microsoft is going to give away good functionality for relatively low cost, or even free, why wouldn’t a VAR embrace that and take its scarce R and D or marketing resources and build something on top of that?”

Office Live is targeted at helping developers build and host their own applications for SMBs, he argues.

VARs could use Office Live to up sell users to the full Office suite, he says. But looking ahead to next year’s release of Office 12, McNabb sees another possibility: Because the new suite will be so substantial many organizations won’t want to deploy it on all desktops, just on information workers who need it. For the rest, Microsoft will launch a hosted enterprise version of Office Live.

If this transpires the implications for VARs who sell, deploy and develop Office applications isn’t clear – or perhaps it its: They’ll take a haircut. And think of the implications if this sort of thinking spreads to the Business Solutions division, which includes Navision, Great Plains and Axapta.

To McNabb, that means resellers should see this as a window to start looking at what they can truly offer customers as added value, as innovative, beyond selling mere infrastructure.

“Organizations that don’t embrace the continual evolution of what infrastructure vendors are going to offer the market are going to view this as competitive,” says McNabb. But, he warns, “there are plenty of other intelligent VARs and ISVs that look at the likes of what Oracle, Sun, IBM and Microsoft are doing on the software as service area as an opportunity.”

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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of ITWorldCanada.com and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including ITBusiness.ca and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@] soloreporter.com

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