Microsoft’s Shift to Cloud Solutions Negatively Impacts Partner Commission Structure

At its prime, Microsoft sold its software solutions through an extensive network of reseller partners.  Not only did the partners earn from software sales but also received commissions for consulting and implementation services.  The shift to the Microsoft cloud solutions has impacted the Microsoft eco-system.

Per Gail Axelrod in her blog titled “Microsoft Cloud Sales Commission Cuts are Just One more Reason Why Google Apps Will Win”, a “Microsoft executive notes that so far only a quarter of Microsoft’s 600,000 partners have joined the company’s cloud channel programs”   Effective January 25, new commissions are going in place per CRN that “have some partners are so angry about having their fees cut that they’re prepared to sell competing products, like Google.”   Per Gail Axelrod, “while Microsoft may be cutting partner commissions to funnel more funds to their direct approach, the move will likely push partners to actively sell both Google Apps and Office 365 – letting the customer decide who wins in the end.”  Ouch!  This is a lesson in how not to turn your allies into your enemies.

News then surfaced on Wall Street via the New York Times this week that 4th quarter earnings show “the new Microsoft has an expanding portfolio of hardware products (Xbox and Surface tablets) with decidedly lower margins.”

Not sure what option Microsoft really had as other cloud solutions had already impacted the sale of software CDs.  However, the mistake was not keeping their sales partners “Happy Happy Happy” in navigating to this new software landscape.  Changing the delivery method of the software certainly would have an impact on the partner network.  Reducing the commission structures further poured salt into the wound.

 

 

steve.peterson@webkpi.com'

Steve Peterson

VP of Marketing & Channel at Cellarstone
Steve Peterson is a small business evangelist and strategist. Leveraging his years as a senior financial executive in public companies and the co-founder of several startups including webKPI, Steve is able to leverage corporate strategies with new technologies. He has also written a series of blogs for the Sleeter Network of QuickBooks ProAdvisors on Key Performance Indicators (KPIs).

Currently, Steve is Vice President of Marketing and Channel Development for sales provider CellarStone, Inc. Steve also runs a LinkedIn group called "QuickBooks and Business COaches".
steve.peterson@webkpi.com'
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steve.peterson@webkpi.com'

About Steve Peterson

Steve Peterson is a small business evangelist and strategist. Leveraging his years as a senior financial executive in public companies and the co-founder of several startups including webKPI, Steve is able to leverage corporate strategies with new technologies. He has also written a series of blogs for the Sleeter Network of QuickBooks ProAdvisors on Key Performance Indicators (KPIs). Currently, Steve is Vice President of Marketing and Channel Development for sales provider CellarStone, Inc. Steve also runs a LinkedIn group called "QuickBooks and Business COaches".

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