Partners: Microsoft's New Surface Membership Plan Could Cut Authorized Device Resellers Out Of Sales Deals

Microsoft introduced a new membership service plan for its Surface devices this week, allowing businesses to buy a new Surface device with monthly payments in exchange for in-store support and service plans.

Partners, for their part, are concerned that the direct Microsoft Surface Membership sales plan will take away enterprise customers from Microsoft’s Authorized Device Reseller channel partners who sell and provide services around the Surface devices.

’It seems like Microsoft is trying to sell more out of their store and cut out the channel,’ said Mike Hadley, CEO of Boston-based Microsoft partner iCorps Technologies. ’They are trying to be the Apple Store. It’s not a bad deal for customers but it hurts the channel anytime companies push potential clients to direct sales.’

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As part of the membership service, customers gain access to phone and in-store tech support, one-on-one personal training, and in-store discounts on future purchases of hardware and software. They will also gain access to Microsoft’s Complete for Business Extended Service Plan with Accidental Damage Protection.

The plan, which is targeted for SMBs and enterprise customers, enables monthly costs—so over 24 months, users can pay for the cheapest Surface Book of the plan for $89.99 per month; the cheapest model of the Surface Pro 4 for $59.99 per month; and the cheapest Surface 3 for $37.99 per month.

A Microsoft spokesperson was not available to talk to CRN about the news as it relates to Microsoft’s channel partners. According to the Surface Membership Program Benefits Summary, the program appears to be limited to Microsoft's own retail stores in the U.S.

Hadley, who became an Authorized Microsoft Device reseller last summer, said the plan will likely target the smaller enterprise segment, including SMBs, and seems similar to Apple’s carrier-free upgrade program introduced last year, which allows customers to pay a monthly charge and upgrade to a new iPhone each year.

Michael Goldstein, president and CEO of LAN Infotech, a Fort Lauderdale, Fla. Microsoft Authorized Device Reseller specializing in the Surface Pro, said he had not heard anything from Microsoft about the service. ’Of course this looks like a ’direct’ type of offering… at this point it shows the tough competition in this space,’ he said in an email to CRN.

Microsoft's detachable Surface tablets have gained traction in part because of their business-friendly features-- according to a report by research firm IDC, detachables powered by the Windows operating system will take 53.3 percent share of the detachable market in 2016.

Despite the Surface's enterprise-focused features, partners in the past have expressed frustration with Microsoft for largely roping off the channel from the Surface Pro line, as it initially started selling its product – which hit the market in 2013 – through large retailers like Best Buy and the Microsoft Store.

Most recently, the company sparked ire in the channel by announcing the ’Surface Enterprise Initiative,’ in September, which essentially turned Dell and HP into Surface Pro device resellers, putting them in direct competition with partners.

While the Redmond, Wash.-based company widened its Surface tablet reseller base with a new wave of channel partners last july, many resellers still feel that the company is just scratching the potential distribution surface.

’What I’d like to see is Microsoft opening up their Surface product to all partners… as far as I’m concerned I don’t know of any downsides of doing that,’ said David Felton, founder of Microsoft partner Norwalk, Conn.-based Canaan Technology. ’Partners like me… could get more sales if the Surface products were opened to partners.’