Exclusive: Ballmer Tells Partners To Buy Surface From Microsoft.com

Microsoft CEO Steve Ballmer told CRN that if partners want to sell the new Surface tablet, they can buy it from Microsoft.com.

"They can’t order from their normal distribution," Ballmer told CRN in an exclusive interview Monday at the company's Worldwide Partner Conference in Toronto. "They can order it off Microsoft.com. And they can do what they want off Microsoft.com. But we are not setting up what I would call a typical distribution chain. What our partners choose to do is up to our partners. "

[Related: Exclusive: Microsoft's Ballmer Throws Down Gauntlet Against Apple ]

Ballmer stressed that there is nothing to stop partners from sourcing Surface from Microsoft.com or retail stores and including it as part of a solution sale.

"Look, let’s just say this is new for us," he said. "We have announced that initial distribution would be off Microsoft.com as well as through Microsoft physical stores. So is there an opportunity? Is there some big distribution? Not initially. We are just getting it out the door. But if a partner says, 'Hey look I want to sell some of these things. I want to put them in solutions,' they can order some off Microsoft.com and sell them. There is nothing that gets in the way of that. But we have not set up what I would call industrial distribution as sort of a first element. We may get there. But if a partner wants to order some and put them in a solution with the customer, we’ll be excited to see that happen."

The decision to not let partners sell Surface comes with Microsoft ramping up the number of retail stores it operates from 20 to 75 stores over the next several years. Microsoft is also expected this week to introduce a Partner Connection program that will let partners work with Microsoft retail stores on higher-end services. Microsoft is in the process of recruiting key partners close to Microsoft stores that can deliver higher-value services for customers.

When asked what he would say to Microsoft partners that want to sell Surface as part of solutions sales with business customers, Ballmer replied: "Go for it! Go for it! Great! Love ya'. Love ya'. Go for it. If Surface makes sense to your customers, you go for it!"

Ballmer did not discount that Microsoft partners would eventually be able to sell Surface. "We made a decision to get into the market in a way where we know we’ll have a perfect experience to get started, and then we can always do more – go broader," he said. "We had no idea what kind of reaction we were going to get to the product, to the concept of us doing Surface. None of that. So we took our first step. It doesn't mean we can't take other steps.

"We get to decide," said Ballmer, speaking of whether partners could eventually be able to sell Surface. "Right now we are focused on executing well this first phase, which is to ship the Surface RT along with Windows 8 in October."

NEXT: Partners React To Microsoft's Surface Sales Strategy

Tommy Bradford, managing director of strategic alliances for Jack Henry & Associates, a Monett, Mo., partner whose Azure Microsoft business is on a run rate to hit $1 million after only seven months, applauded Microsoft’s decision to introduce Surface.

"We are putting pressure on our [Microsoft] guys to get us Surface as soon as possible," he said in an interview at the Microsoft partner conference. "I can tell you that what we are seeing, our customers at our big user conferences are very intrigued with Surface. They like the fact that Windows 8 [on Surface] can give you that immersive, fluid experience, and then they know they can go and run our apps on the desktop. They like that. They like the manageability of that."

As to whether Jack Henry & Associates is interested in selling Surface, the company would like to sell "any products that make sense for us where we can add value to it," said Mark Forbis, vice president and CTO of the company. "If we are packaging products and solutions on there, that's great. But if we can't make an appropriate margin and sell it with our partners, then we don't want to get in the middle of it. We'd love to be able to do it if it makes business sense."

Bob Venero, CEO of Future Tech, a Holbrook, N.Y.-based Microsoft partner who is not attending the Microsoft partner conference this week, called Microsoft’s decision to not let partners sell Surface an "insult" and a "smack in the face."

’It is a sad day when Microsoft wants to become Apple,’ said Venero. ’Instead of trying to be Apple, they should stick to what makes them successful which is their partner community.

’If you look at the history of what partners have done for Microsoft over the year, it is a smack in the face,’ said Venero. ’We helped to create the vast enterprise that is Microsoft. If we look at the integration work, solution sets, [software] rollouts, licensing management, all of those things that we have done for small-medium businesses, midmarket, all the way up into the enterprise and government, that has all been driven through partners.

"Just because Apple is eating Microsoft's lunch on the tablet doesn't mean their route to market should exclude the partners," said Venero. "Microsoft is telling us to go pay retail for the product and buy it from Microsoft.com and integrate it into our solutions. With Apple we can sell and support the iPad and make it part of our business. If Microsoft is going to keep Surface away from partners and treat us like a retail customer, it is absolutely an insult.’

PUBLISHED JULY 10, 2012