April 6, 2007

tech problems don't exist


[Cartoon part of the Microsoft Blue Monster Series. Backstory from Steve and Kris etc.]

So, what does it feel like to be working for Microsoft?

Well, financially they're still a relatively small client of mine, so it's not like they own me outright [yet]. Unlike Robert Scoble [who no longer works there], I'm not on salary. But I'm pretty psyched to be involved with them professionally, even in a small capacity.

I am working with the Partner Group, which is also my friend, Steve Clayton's neck of the woods. Although granted, Steve works for the UK office, and I'm working for the Redmond office. But there's a lot of cross-fertilization going on between the two.

For me, it's not a bad place to get a good glimpse of the company. Why? Because here's a stat to get your head around:

Over 95% of all Microsoft revenues come from their partners.

A partner is basically a business, large or small, who uses MS stuff to make money. A large partner would be someone like Dell or Toshiba. A small partner would be the guy round the corner with the wee computer repair shop.

All in all, MS has 750,000 partners world wide, at different levels of engagement. For every dollar that Microsoft gets from their partners, over ten dollars is created within the Microsoft Partner ecosystem. So off the top of my head, using MS gives the partners an ROI of over ten-to-one. I can think of worse business models.

Basically the way things now stand, without their partners, Microsoft would be incapable of making money. So I think it's a good place for an outsider like me to get a better idea of where the company meets the real world. The real world of making money.

Back on the Blue Monster page, I wrote:

For too long, Microsoft has allowed other people- the media, the competition and their detractors, especially- to tell their story on their behalf, instead of doing a better job of it themselves.

We firmly believe that Microsoft must start articulating their story better- what they do, why they do it, and why it matters- if they're to remain happy and prosperous long-term.

Something to consider: Not only does Microsoft have to get better at telling their story [for obvious reasons], somehow MS has to get bet better at teaching their partners to tell the MS story.

i.e. From a marketing perspective, it's not what MS says to their partners that's important. It's what their partners are saying to their customers about MS that's important.

Or am I missing something?

[P.S. Any Microsoft employees or partners reading this, I would LOVE your feedback. Please feel free to leave comments or send an e-mail, Thanks.]

[Bonus Link:] The Blue Monster described as "Moonshine Marketing".

Posted by hugh macleod at April 6, 2007 3:58 PM | TrackBack

Well Hugh, you have been defining and preaching about the Global Microbrand for years.

So what is the essence of your theory about the Global Megabrand ?

Posted by: tk at April 6, 2007 5:02 PM

I think it's also about how Microsoft make their customers feel and how the Microsoft partners make their customers feel...

Sounds like they're moving in a positive direction at any rate.

Posted by: Firefly at April 6, 2007 5:03 PM

It's about time Microsoft stepped things up a gear. This is all good news. Except I still feel they make a pretty weak product...

Posted by: Rob McDougall at April 6, 2007 6:28 PM

Fair enough, Rob. So what's stopping you [or anyone else] from building a better mousetrap?

Posted by: hugh macleod at April 6, 2007 6:36 PM

I'm unsubscribing to Gaping Void today. Thanks for the great grins over the years, but as you're demonstrating, everyone has a price.

Posted by: Former reader at April 6, 2007 6:39 PM

The problem with Microsoft's image is that it mostly pays attention to marketers who only see trends after they've already happened. Even here is a good example. Did Microsoft hire you before you transformed a small South African winery? No.

They don't take risks any more on small things and make them big themselves. They just wait for other people to do the hard work of building a doubling effect (which is what you did) and then they'll either buy it, or clone it.

That is the condundrum of working at Microsoft. You have lots of resources (although they never really let the average employee go crazy) and lots of customers and lots of products. But lately Gates and Co have been fairly conservative. Particularly when it comes to the Internet.

Which is why we have Google, Amazon, eBay, Yahoo and hundreds, if not thousands, of small Web 2.0 startups trying to do weird little things.

Can Microsoft get its leadership role back? Of course. Never bet against a company with billions in the bank.

But it will be fun watching what you do there.

Regarding microbrands. The marketing challenge for a big company is to appear small. The marketing challenge for a small company is to appear big.

Think about that one for a while. Might explain why I had a $250 camcorder when working at Microsoft but have a $5,000 one now that I'm at PodTech. :-)

Posted by: Robert Scoble at April 6, 2007 6:43 PM

Fair enough, Former Reader. I'm glad you enjoyed gapingvoid over the years. Very much appreciated etc. Thanks.

But your comment, frankly, tells me that you know very little about what genuinely interests me, and that you care even less.

Godspeed, all the same.

[Note To Self:] Obviously a Mac user. Heh.

Posted by: hugh macleod at April 6, 2007 6:44 PM

OK so Ill bite about 'am I missing something.'
Maybe it's the troll in me:)
As you say, it's not enough to tell a cool story: you have to be doing cool shit. And Linux, Unix, Slax, Apache, YOutube, Google and Apple are ALL doing cooler shit. Where are the cool MS offerings? Vista? Zune? Hope you help uncover them.
MS could start by not inhibiting the democratization of media. If this were the case, we'd all be telling that story.

Posted by: John at April 6, 2007 6:52 PM

Well, Robert, I doubt as an MS employee they would have ever let me do this, though I could be wrong. Hell, they let you run wild around the place for a while, so that obviously says something.

Also I think it's interesting to note that the Blue Monster meme first started in the UK office [thanks to Steve Clayton], a relatively peripheral part of the total MS culture. I get the feeling had we launched it from Redmond it would not have fared so well, though again, I could be wrong.

But as you were fond of asking back in your MS days, how do we turn this great supertanker of a company around? A compelling question, one that will never go away, one that has profound implications for all sorts of businesses, and as a marketer, it's something I find utterly, utterly fascinating.

Posted by: hugh macleod at April 6, 2007 6:53 PM

Robert - some good arguments. Big companies clearly find it harder to take risks and as you showed whilst at Microsoft, it's the people on the ground who take the risks (both personal and on behalf of the company). Hugh got hired by some risk takers at Corp, not by Bill and Co.

With respect to Amazon, Google and others a major difference is Microsoft's channel approach. Sure Microsoft will release something cool and innovative every now and then but more interesting is the channel of partners doing that on the Microsoft platform - people like Skinkers, Mydeo, Caspian, Horsesmouth, Dotnet, Thirteen23 and many more. That's a pretty serious business engine that most observers of Microsoft miss. As Hugh says, we need to make them the rock stars as they're a huge competitive advantage to Microsoft.

Posted by: steve clayton at April 6, 2007 6:56 PM

I am with a scottish partner. The 10 to 1 thing is a bit of a red herring with a development house - the software revenue flows from the development not vice versa - but we can only do cool stuff because of the great software (rob is so wrong about product).
Microsoft does need to help us talk about them but too often our experience of Microsoft does not support a positive tale - so we are telling a story, not passionately relating experience. I want to do the latter.

Posted by: Frank at April 6, 2007 9:17 PM

Steve: a lot of people inside Microsoft think what I did for three years was be an arrogant, egotistical asshat.

They missed the little secret sauce that I fell into by accident: these tools let you listen to customers and influentials and haters and respond.

I know of one cool team at Redmond that's about to bring out something small at Mix07. It's not a big thing that'll kill Amazon or Google. It's a small thing. But it'll get lots of hype.


Because they demonstrated they are listening to the conversation that's happening out there across tons of tech blogs.

That's what's magical about Microsoft letting average employees blog: it guarantees that a few will fall into the same secret sauce I did and will have to listen to people outside of Redmond for a few minutes a day.

It just was frustrating to me that I couldn't get the leadership to really listen too.

Posted by: Robert Scoble at April 6, 2007 10:29 PM

Oh, and Steve, it's the partners that are important to Microsoft. I agree. Ballmer yells "developers, developers, developers."

The thing is developers and influentials are leaving Microsoft in droves and Microsoft isn't doing much about it. That's a huge change in Microsoft's stance from, say, 1995 where Gates got nervous cause a kid named "Mark" was saying Netscape was going to be a platform.

Posted by: Robert Scoble at April 6, 2007 10:33 PM

Steve - you forgot to add: as long as it runs on SharePoint and ensures folk remain wedded to Office. That's not a choice thing and choice is where people are at today.

When the Blue Monster finally caves in and says: 'we're dicounting 90% on the commodity but you pay for the real extras' then I'll be a huge fan. As it is, Microsoft sucks calories from IT that it doesn't deserve. That's why it is pretty much shut out of recruitment in the Valley - where the innovators are working. Or at least that's what your company's innovation team leader tells me.

No amount of fun stuff that Hugh does will change that. This ain't consumery stuff that you can decide to take or not. This is serious business stuff with real $$/££/€€ at stake.

Oh yes - Hugh - with ROI embedded. -:)

Seriously though guys, if this has the effect on M$ that is needed then all the above just kinda slot into place.

Posted by: Dennis Howlett at April 6, 2007 10:40 PM

Hugh - I've loved this cartoon since the day you put it on the site. I've always felt that it could apply to so many companies (big or small) and it is such a powerful message.

Would you consider that? Allowing anyone to put their name where "microsoft" currently is written?

Posted by: Shripriya at April 6, 2007 11:13 PM

Hugh, I think you are MS's future "cool shit".


Posted by: RKR at April 7, 2007 12:14 AM

Hugh - building a better mousetrap?

Had I been back here earlier I'd have posted something very similar to John:

"it's not enough to tell a cool story: you have to be doing cool shit. And Linux, Unix, Slax, Apache, YOutube, Google and Apple are ALL doing cooler shit. Where are the cool MS offerings? Vista? Zune? Hope you help uncover them. "

I wish you all the best, but I still really feel that the Windows platform in general has never been great, and now it's having to play catchup.

Posted by: Rob McDougall at April 7, 2007 2:54 AM

I'm not sure how "partner" is an honest term compared to "customer". Let's say Microsoft's definition is, as you say: "A partner is basically a business, large or small, who uses MS stuff to make money."

That's just insane. A partner is someone whose star is tied to mine. And that's bidirectional. As a result, I have direct leverage on them, and they have direct leverage on me.

Consider a small high-end clothing designer. They may use Brand X sewing machines in their work. But if Brand X machines can't cope with a new fabric, it's unlikely that the designer can get much leverage on Brand X, at least by themselves. Their recourse is to the market.

Brand X does care about the collective reaction of the people buying their machines. If enough are not satisfied, they will go out of business. But that's the nature of a traditional producer/consumer relationship.

If I cannot directly, personally affect the strategy of someone, they are not my partner. And they should not consider me one either.

Now, let's wander off to http://en.wikipedia.org/wiki/Suzerainty ...

Posted by: triangular gutters at April 7, 2007 8:42 AM

I wondered if the assimilation was of the same kind that sucked a lot of well-known names into MS Research -- it seems not.

Next I wonder whether the blue monster has any chance to make MS's big brother-y attitude go away, with the enforcement of regular online registration and everything. Redmond's products still speak a completely different language than the people, and, for instance, EMI.

Posted by: Andreas Krey at April 7, 2007 8:52 AM

I hate to say this Steve but if I've found the links to the companies you cite I can't say I'm overly impressed. The nearest I get to a revenue number from any of them is a 'hope' that Mydeo might reach £1 mill in revs this year. And that follows an admitted mis-step in the offering that put them back 3 months AFTER partnering with Microsoft.

In the meantime, YT has cornered that market for the time being don't you think? If not then PodTech is doing a pretty good job.

I saw Robert's Thirteen23 vidcast and went to the site but again to me it was 'So what? Futures. Show me when you've got something meaningful.'

Sorry but I don't see 'a pretty serious business engine' in any of the examples you're highlighting.

I already know what excites me as a business user and some of it is built on Microsoft technology.

Posted by: Dennis Howlett at April 7, 2007 10:12 AM

Read this in the same sitting as http://www.paulgraham.com/microsoft.html

Would you disagree with Paul's take, or use it as further evidence that MS needs to work on its storytelling?

Posted by: Matt Gillooly at April 7, 2007 11:49 AM

I would suggest that discovering the partners' real ROI might be a worthwhile exercise. It's ceratinly not 10 to 1 because that doublecounts the Microsoft take-out, so the figure would be 9 to 1 which is still a good number except that it takes no account for whatever investments the partners make. Who knows what the actual figure is?

Another way of looking at the same data is that Microsoft are taking 10% of the partners' revenues as a licensing fee for their software - from a partners' perspective that may be a good deal or it may not and the answer to that question might yield some insight as to how the partners feel about Microsoft and by extension how willing they are to evangelise Microsoft to their customers.

Posted by: John Dodds at April 7, 2007 1:35 PM

From a marketing perspective, it's not the 10% that MS takes from its partners, it's what they give their partners inexchnage for that 10%. The more they give, the more the partners will be inclined to talk about them.

Posted by: John Dodds at April 7, 2007 2:03 PM

Just give me an OS I can boot up in under 10 seconds please.

Posted by: Charles Edward Frith at April 7, 2007 5:37 PM

Dennis - all the companies I cited (excpet Thirteen 23 who are US) are examples of UK companies that are small startup types working with Microsoft. The ones that maybe would be shut out in the valley but not here in the UK. There are people in my own team listening and helping these companies and others on a daily basis. Maybe iniatives StartupZone or IPVentures doesn't work for those folks our west?

Companies who are being successful in their relationship with Microsoft here in the UK? I could offer up a lot of them and to answer Robert's point on developers, developers, developers it's not just that group. VAR, SI's, web developers, Companies like Lynx, Servo, Doherty, Syntax, Conchango, Risual, Touchstone, Westcoast and many more. Our difference to for me is that great community. I have to confess I don't know as much about Google's partner community but I don't see many people but Google making money in that ecosystem. You may tell me I'm wrong though.

On Mydeo; I was with Cary Marsh their CEO last week and whilst there may have been missteps she was pretty clear that their relationship with Microsoft has been beneficial to them. She gave some strident feedback to our MD but unless I mis-read her, Mydeo is pretty positive abotu their Microsoft relationship.

Don't get me wrong, I'm not saying we're perfect and all is well in the Gates garden but I get tired of the constant barbs and "Microsoft Is Dead" stuff. There are people who who care a lot about the partnerships Microsoft has and try to make up for the deficiecies we have in many other places by being honest, open and transparent.

That's all we're trying to do here - open up more of the conversation so thanks for joining in.

Posted by: steve clayton at April 7, 2007 8:50 PM

Baldy Ballmer might be crying out "Developer", "Developer", "Developer" but the small independant developers are running in all different directions.

Take a look at any of the many successfully independant garage startups and see how many are running on or have been developed with MS tools. It's all Linux, Ajax and Ruby on Rails with Apache on the server.

As long as Microsoft gears the pricing of its development tools to the corporations or startups with VC money to burn they will find their userbase being chipped away at.

There's a lot more small independant developers out there but when they are forced between paying $1,195 US for the Visual Studio Professional Standard MSDN subscription and putting food on the table and using Linux / PHP etc guess which wins.

and thats not even taking into consideration the SQL Server and web server costs.

If they want to attract the independant Web 2.0 companies and encourage use of MS software then perhaps thinking like a cash strapped startup might help .. maybe even coming up with a LAMP alternative.

Not all innovations come from big partner channels anymore but Microsoft seems to have forgotten that.

Posted by: Steven Hodson at April 7, 2007 9:31 PM

Steven - this is a REALLY great point. I sat with a team from Redmond last month and pretty much begged them to do "LAMP in a box" with the Microsoft toolset to make it easy for small (even big!) dev houses to quickly get access to the Microsoft toolset of Visual Studio, IIS, SQL and Windows Server. You can get these via numerous routes at the moment but that's the problem - we don't make it easy. I also asked them to create an image of a server with all of this stuff on so you don't have to build it if you don't want to. or a sanbox in the sky for people to code against. You're absolutely spot on and I'll take your feedback as further evidence of what we need to provide. Thanks...now off to check out TwitBox!

Posted by: steve clayton at April 8, 2007 10:48 AM

Steve: I can find examples of Microsoft-based developers even in Silicon Valley (and have written about them too). Even Google's #1 Canadian customer (Plentyoffish.com) uses .NET and is very happy. So does MySpace (although Ballmer did some arm twisting to get them to switch from Linux to .NET).

But, don't look at the trees. Look at the forest. And even in Europe most of the time when I interview an entrepreneur I hear "we are a LAMP shop" or "Rails" or "Amazon S3."

Microsoft also doesn't get small things. Usually. How many Microsofties are on Twitter? Yet I can name tons of CEOs, journalists, even a presidential candidate, tons of Google employees on Twitter (even though Google owns a competitor named Dodgeball).

Why is that? What does that demonstrate?

Posted by: Robert Scoble at April 8, 2007 7:00 PM

Robert, I'm looking at the forest - that's the first bunch I mentioned that Dennis commented on. I'm going to the events here, talking to the up and comers as much as I can. when you next come to London let me hook you up with some of the folks on the list I provided. I'm not suggesting we're doing well here by any means but give us some credit for knowing the issues are there and trying to fix it. I know you're not suggesting we just walk away in the face of a challenge right?

With respect to Twitter, I'll admit that right now I'm not on it. Hugh and I talked about this last week. I mentioned that I've chosen not to thus far as it sounds like it's going to eat a lot of my time and I given this isn't my day job and I feel out on a limb already I'm guarding my time carefully. That may change over the next week as I found a cool new app (via this thread) for Twitter on Vista.

Posted by: steve clayton at April 8, 2007 11:26 PM

I think Robert is "twitterpaited".
Why is that? What does that demonstrate?

I predict today's twitter is tomorrow's something else. But I digress.

Which "partner" are you referring to? Microsoft registers/certified/gold partners? Or ISV partners? Because there are different types of partners in the partner eco-system.

Robert, as he always does, talking about the ISV partners that build applications. There's another partner out there that just deploys the finished products.

Not everything is "Developer, Developer, Developer" you know. Sometimes it's "VAR/VAP, VAR/VAP, VAR/VAP". :-)

Posted by: Susan at April 9, 2007 3:41 AM

Robert: and how many of them are being funded by VC millions? in which case it's easy to write off a few grand in development tools. It isn't so easy though for a independant developer who has to explain to his (or her) better have over breakfast before heading out to the garage why they need to spend thousands on tools. Especially with bills coming due.

And Microsoft isn't the only guilty party in this corporate dev mentality. Just look at the cost of any of the excellent 3rd party components for .NET You get a couple of those subscriptions under your belt and you are again into the thousnads of dollars.

All this in contrast to the toolsets available to Linux/PHP/RoR/LAMP devs and it is easy to see why Microsoft is losing and will continue to lose in the small and independant marketplace.

But then maybe they just don't want our business after all why would they when they have the corporate dev houses more than willing to crack open the wallets.

Posted by: Steven Hodson at April 9, 2007 5:10 AM

I wanted to give my perspective on what Microsoft is doing in the Small Business space with its Microsoft Small Business Specialist Programme. This has been a serious effort by Microsoft to support small business Partners who were never on the radar of Microsoft. It has given us a voice, tools, training and Microsoft has listened to us to better deliver to our small business customers. I came to the Microsoft Partner ecosystem from being a totally Open Source focused business but quickly realised this was not serving my customers as well as it could. It's not about "selling out" and doing business and making money is not a pseudo-religious crusade! We choose the solutions which best serve our customers and Microsoft does have a lead in a number of areas for small businesses. The SBSC Programme is something that other vendors are falling over themselves to get linked in with, so that sounds reasonably innovative and forward thinking to me!

In terms of development tools, you can sign-up for the Empower ISV Programme and get a MSDN subscription for about £300, or get the Express versions of the tools which still allow a significant amount of development to be done.

Posted by: Vijay Singh Riyait at April 9, 2007 12:06 PM

Hi Robert: Does Microsoft get small? I'd say "get it" vs. "act-on-it" are two different things. We try to hunt for the big chunks of technology and refine that, then let our partners make it work in a variety of geo, regionao, vertical and niche ways. That's the model we've been operating on since day 1. Do we think about small business? Absolutely! Do we think about small partners? positively. It's more about how we think of small things vs. whether we think of small things.

Do we read sites like Twitter? I think more Microsoft people are in placed like Twitter than you think. As you know, with few exceptions (in jobs such as yours where you could write as "@microsoft.com") most people are not writing on behalf of Microsoft (@microsoft.com). Rather, everyone's encouraged to write as individuals and tell the world how they think as me@domain.com and disclose any Microsoft affiliation as appropriate. So, when you register for Twitter, you see me as kris@fuehr.com but the info I collect and share is all brought under my hat and into my decisions at work each day in Redmond.

So, I think you don't know it but we're here. I'd say a disproportionate number are in XBox forums :-) (ha) but we're small in the same way that any individual who works for any company is small.

If I were running the company I'd say the same thing: "Blog as an individual". As you know, blogging is time consuming. You can be in the Blog Vortex for what could be hours. Meanwhile, there's work to be done: coders need to code, writers need to write and the administrators need to administer.

As for the speculation about Microsoft being a bunch of product groups under one roof vs. one coordinated company. IMHO, I'd say it's the former.
I'd say we suffer the downside and reap the upside of that. But I've often said, we're a giant strip mall with independently operating stores and a central management. (and we happen to share a bank account). Partners are independent franchise who benefit from our consolidated (interoperable) stuff.
In my humble perspective as an individual who works for Microsoft, that is. ;-)

Posted by: Anonymous Microsoftee at April 9, 2007 9:47 PM

Your comment, Hugh:
i.e. From a marketing perspective, it's not what MS says to their partners that's important. It's what their partners are saying to their customers about MS that's important.

I think is right on: We have been talking about "Through Partner" vs. "To Partner" to distinguish our messages that they care a bout from a customer-facing vs. business-management perspective.
In the end, people sell what they know and love. If our partners love to work with our software because they know it and we make it easy for them to gain access to it (all of our business products are given free to partners to evaluate, test and use internally), that's the best ammo we can give them to then convey to their customers. (through partner). Couple that with a bunch of great demos and some key competitive comparisons and that would probably be enough to start but we go waaay beyond that but I don't want to turn this into a pitch.
On the to-partner side, we're trying to crack the profitability algorithm to help take a way risk by walking through some key profitability calculations on what it would cost to take on a new technology, a new customer, a new market. (that's the to-partner).
So we need to balance our allotment to "to" and "through".

In the end, if I were a partner, I'd look at this Microsoft partnership like the cheapest independent franchise in the world. It's a fairly turnkey approach to taking best practices, well-known software and charging my own price for the solutions I build.

Then, if I can get the right customer "value" stories refined to enough customers, I can hit the jackpot.

We're not making this stuff up, it happens all the time. Guy starts in garage, gets the right combo of customers, skills and familiarity of product. Tells a good story to enough customers. Then tells us how they're hiring their 10 or 20th person in 2nd year after moving out of their garage.
Those are the stories that get me to work every day.

Posted by: Anonymous Microsoftee at April 9, 2007 10:05 PM

Not that I have clue what you're going to do for Microsoft...but I sort of applaud MS for pushing out the 'ecosystem' word in favour of the old fashioned 'partner'.

On the other hand partner is a really clumsy word to describe the array of interdependencies and power imbalances which really exist out there.

A lot of richness gets lost when you clump 750,000 companies into one category like 'partners'.

If you can provoke some more structured conversations around mutual value-exchange, that would be a big step forward for them.

Cash is not the only fruit.

Posted by: Tim Kitchin at April 12, 2007 12:08 PM

Communication... something that MS has not done well, and is doing a remarkably bad job of at the moment. Bottoms need kicking -- and I know the new MS UK MD is making changes.

One big problem is that MS doesn't actually work as a global company. It works as a NW USA based small shop with outposts. I pray for the day when MS wakes up and stops treating MS UK as a regional sales shop and profit center.

Posted by: jon honeyball at April 13, 2007 10:25 AM

I have to say i'm impressed.


It's been a while since i've noticed such wildfire around something so simple and elegant as these bullets from reality.

The notion of the drawn insight is something I am naturally attracted to - the cartoon that can reach a place no worthy article can reach - its one of the few things i've come across that mirrors my own work. But its way more fun...

I have to say Microsoft could do far worse than turn Hugh's work into their global communication strategy and get at real people, doing real things with real joy and truth... and just maybe start to communicate with us Mac folk!!...


Posted by: John Caswell at April 14, 2007 9:26 AM

One thing MS need to do then if they are incapable of making money without their partners - is to stop biting the hand that feeds then. Ref 'Live.com' strategy : considering the movement to hosted servers (and selling using the SPLA licensing scheme), hosting partners are going to be MORE important.

I can see it already starting to hurt MS as many hosting partners are talking to end-users (MS customers) about open source based products (ie. Zimbra vs. Exchange) because MS now say they are going to do hosted Exchange themselves.

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