Microsoft Partners To Provide Retail Store Services

planned line of branded retail stores

Microsoft's U.S. Small and Midmarket Solutions & Partners Group (SMS&P) has tapped OnForce, a Lexington, Mass.-based online services marketplace for IT professionals, to maintain lead distribution for services SKUs Microsoft will sell at its retail stores, sources said.

OnForce handles lead distribution for a current SMS&P program that connects SBSC partners with retail SKUs from the likes of Best Buy, Staples, Office Depot and Tiger Direct. That program now has about 200 SBSC partners, and Microsoft wants to expand that to 1,000 SBSC partners this year. SMS&P intends to connect this program to the Microsoft retail stores, sources said.

The program is similar to the one Microsoft launched with CompUSA in March 2007, in which Microsoft SBSC partners provided services to CompUSA's small business customers in conjunction with CompUSA's TechPro Business Providers program.

Microsoft is positioning these efforts as ways for SBSC partners to build services revenue and gain new customers. However, some VARs are concerned about the potential implications of Microsoft selling long-time channel cash cows like Small Business Server direct to customers through its retail stores.

Earlier this month, after Microsoft announced its retail push, Robbie Bach, head of the Microsoft Entertainment and Devices Division, told the The Seattle Times that the stores would be more about brand-building than about volume distribution. The SMS&P program, then, would seem to be a departure from that goal.

Some sources also suggest that Microsoft retail stores could cause partners to lose control over customer relationships and be reduced to the role of providing delivery and installation services.

"If someone goes into a Microsoft retail store looking to buy a product, and the Microsoft guy helps them find what they need, then they own that customer relationship," one source said. "If the role of the SBSC is to install what was sold, I don't see how we'd be building any kind of relationship with that customer."

To some VARs, the retail store situation is reminiscent of the Microsoft Software-as-a-Service (SaaS) argument that blew up last July at Microsoft's Worldwide Partner Conference.

When Microsoft revealed pricing and commission details for its suite of hosted business applications -- which included Microsoft taking control of the customer billing relationship -- the software giant assured angry partners that they'd have plenty of chances to provide value-added services.

"In other words, without coming right out and being honest with us and saying they are going to be directly competing with us, Microsoft will be diverting our attention to giving us 'service' revenues," said one source.

But while Microsoft's retail store plans will no doubt be a lightning rod for Microsoft critics, they shouldn't pose any problem for VARs who are secure in their business relationships with customers, said Mark Crall, president of Charlotte Tech Care Team, a Microsoft partner in Charlotte, N.C.

"Anyone who goes into a big box store and buys something for their business isn't necessarily the kind of customer we're after," Crall said.

The key for Microsoft to avoid conflict with partners will be to ensure that its retail staff can recognize when to send customers to SBSC partners, according to Crall. "If they can accomplish that one thing, the majority of partners won't have a problem with it," he said.