Microsoft's Ballmer Touts New Products, Mum On Channel Surface Tablet Sales

Touting the opportunities a wave of new products being unveiled this year will create for partners, Microsoft CEO Steve Ballmer, in a keynote speech before 16,000 at the Worldwide Partner Conference in Toronto, said the event "kick[s] off what I consider to be the most epic year in Microsoft history."

Microsoft used the morning keynotes to say that Windows 8 will be released to manufacturing the first week in August and generally available by late October. The company also announced a plan to let partners resell the Office 365 cloud application suite and bill customers for the subscriptions, eliminating a point of contention that's existed between Microsoft and its partners since Office 365 went live more than a year ago.

But, channel partners had to be disappointed when Ballmer and other Microsoft executives made no announcements about whether the channel will have an opportunity to resell the Surface tablet computers Microsoft recently unveiled. At the time of the Surface announcements, Microsoft only said it plans to sell the devices through the company's retail stores and some online sites.

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"I will tell you, our partners, that this year, this year, is the most important year of unparalleled opportunities," said Ballmer, as exuberant as ever despite battling several balky microphones while speaking in the cavernous Air Canada Center. "The chance to strike, the chance to make a difference, the chance to build your business, the chance to grow," he said.

The theme of Ballmer's address was the wave of new products Microsoft has already introduced this year and will be debuting later this year. "It's Windows, it's Windows Phone, it's Windows Servers, it's Windows Azure, it's Office. It's the core of Microsoft reinventing itself for a modern era," he said. "This year will be the best year ever, ever, ever, to be a Microsoft partner."

Opening the keynote session, Jon Roskill, corporate vice president and head of the worldwide partner group, said Microsoft's partners generated $609 billion in total sales last year, up 13 percent from the previous year. "Microsoft and its partners are getting it right, and we're onto something big," he said.

The Windows 8 general availability announcement, made by Tami Reller, corporate vice president and CFO of Windows and Windows Live, was one of the biggest applause-getters of the morning. Ballmer called Windows 8 "simply the biggest deal for our company in 17 years," a reference to the launch of the breakout Windows 95 desktop OS. "It's a huge opportunity for our partners."

But, upgrades to the current generation Windows 7 has also presented opportunities for partners as well. Reller said more than 50 percent of all enterprise desktop PCs are now running Windows 7 and more than 630 million Windows 7 licenses have been sold overall.

NEXT: Microsoft's Steps To Boost Office 365 Channel Sales

The other big applause generator was the announcement of the Office 365 Open Program under which channel partners can buy Office 365 subscription keys from Microsoft, resell them to customers and directly bill customers for the subscriptions along with other services.

Until now Microsoft controlled the Office 365 billing, a policy some partners felt got between them and their customers.

Partners can continue to offer Office 365 under the existing Office 365 Advisor program under which partners received a percentage of the subscription fees for reference-selling the cloud application suite. Monday, Microsoft announced that it is increasing those margins up to as much as 23 percent, 11 points more than today, when they sell more than 150 seats of Office 365, said Kurt DelBene, president of the Microsoft Office Division.

While virtually every Microsoft executive at one point referred to the new Surface tablets, there was no specific announcement about the role the channel will play in selling them. The Surface announcement has also created tension with Microsoft's OEM partners who manufacture Windows-based tablets.

The executives appeared to be downplaying that tension: Ballmer at one point referred to the Surface devices as "just a design point" and said Microsoft has a "mutual goal" with OEM partners to bring a diversity of devices to market. In her presentation, Reller demonstrated a number of devices from OEM partners running Windows software.

Microsoft also announced that it is acquiring Perceptive Pixel Inc., a New York-based developer of large-scale, multi-touch display technology, for an undisclosed sum. DelBene said the technology can be combined with Windows 8 and hardware from OEM partners to create interactive wall displays and other products.

A demonstration of the technology by Jeff Han, Perceptive Pixel founder and CTO, wowed the audience.

Ballmer and DelBene also touted the potential opportunities for partners that Microsoft's pending acquisition of Yammer, the developer of social networking cloud applications for businesses, will bring. But other than general plans to integrate Yammer with SharePoint, Skype and Lync, there were no specific announcements made.

PUBLISHED JULY 9, 2012