So, Jeremy on Twitter asked me about Microsoft Partner designations that are replacing the existing programs. He noted that the new program is “significantly more difficult to attain” and “It isn’t exactly easy to navigate the partner site or get help.”
It seems Microsoft’s changes are impacting their bottom line too. On the earnings call on Tuesday, Chief Financial Officer Amy Hood said “partner transition work” hurt growth with small and midsize business customers and added that “moderation” in small and midsize business (SMB) deals had a negative effect on paid Office 365 commercial seats, the Enterprise Mobility + Security business and Windows commercial products and cloud services revenue.
Licenses aimed at SMB customers are “primarily sold through a partner(s), and so we need to make sure we‘ve got the best value props but got to make sure the price is right, offer’s right and make sure that we are tuning that value prop to what small business customers need today, which is great value,” Hood said on Tuesday’s call.
“We’ll keep executing that through a partner(s). We’re in the middle of that transition we talked about last quarter, and we’re still working on it,” she added.
She continued: “That is a spot where you tend to see macro weakness show itself … while I can’t tell you in particular which part of that was some of the partner transition work we’re doing versus macro, it certainly feels like both. And so that’s certainly a spot that we’re watching.”
Of course, their shares rose 5% on Tuesday, too, after they included positive income forecasts for the year, and the main driver of growth is the Cloud products, specifically Microsoft’s Intelligent Cloud segment, which consists of the Azure public cloud for application hosting, SQL Server, Windows Server, and enterprise services.
So I noted it Google’s cloud revenue was up too, a 35.61% increase from the same quarter of 2021. While their ads business missed revenue expectations, their cloud business is looking strong.
My take – Microsoft is convinced their new partner program will get them to more significant growth and more sales. That’s the goal. They are in the midst of the transition, and so they’re prepared for choppy waters… and, more importantly, not being punished yet by shareholders. Each quarter we should be watching that and see how it improves. If it improves, you shouldn’t expect more changes soon. If it doesn’t, expect them to course correct.
Now is absolutely the time to be trying to address the program changes. And Microsoft, if you’re listening, you have at least one partner confused, and you can find him on the @MSPRadioNews Twitter feed. If there’s one speaking up, there’s probably more.