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By | Mark Ballard 14th July 2006 09:46

Microsoft Live could use channel

Upheaval still inevitable

Microsoft's plan to sell its software direct over the internet is still so green that the software giant might employ channel partners to operate it outside the US.

Microsoft president Steve Ballmer announced this week that the iCRM system would be sold direct to customers over the wire from Q2 next year. The vendor hopes to work out new business models with channel partners so they can still play a part in the direct sales programme, he told delegates at the company's Worldwide Partner Conference in Boston.

Paul White, UK business group head of Microsoft Business Solutions, said so far it only has plans to establish its own data centres to run the direct sales programme in the US.

"How we put it up in the UK has yet to be determined. We'll launch in the US, get some exposure there and then take a view. It will be an economic argument internally," he said.

The decision however, would be made at Microsoft's Redmond headquarters.

The director of one UK partner who had worked at Microsoft surmised that there would be no long-term strategy to exclude the channel. Microsoft would trial its plan to provide its CRM software as a hosted service direct to customers in the US, he said. It could do it no other way - because no partner would be willing to run a data centre just to test one of Microsoft's new wheezes.

Once it had figured out how the model worked, Microsoft would farm the hosted service strategy out to partners so they could run it from their own data centres.

Yet, Microsoft seems dead set on selling direct from its own data centres. UK officials said this was a direct software sales strategy, leaving partners to concentrate on services sales.

According to Ballmer, the new sales model would include referral fees. Such an agency model would be in keeping with a direct strategy that nevertheless accepted sales leads from partners.

Other channel models would also be considered, he said, and they would be determined in Microsoft's partner council meetings. It would also consider sharing advertising revenues with resellers.

In the context of the Live strategy, Ballmer primed partners for upheaval. Change was inevitable, he said, and where the vendor led, they would follow.

"New channel models will give birth to a whole new set of partners," he said. ®

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