Microsoft Leverages Partnerships for Features Exclusive to the Surface Pro 3

Two exclusive features of Microsoft’s Surface Pro 3, namely the efficiency of the chipset supporting Intel’s quad core processor, and Photoshop Touch, would not be available without direct participation from Adobe and Intel in the collaborative design of the product. Readers can watch the webcast introduction of this product to catch the specifics of each of these features.

The development of these features is not the only recent example of Microsoft® successfully leveraging opportunities to collaborate with other ISVs. During the week of May 19, 2014, Microsoft also announced a joint effort with SAP: SAP and Microsoft to Deliver Tighter Integration for Application Development and Cloud Deployments.

The potential benefit to Microsoft’s bottom line implicit to these collaborative wins should not be underestimated. SAP is a very large force in precisely the same enterprise markets Microsoft already dominates with its operating system and office suite. Since the SAP effort focuses on Azure, its impact on Microsoft’s share of the enterprise segment of the global cloud may be important.

In turn, the collaborative wins with Adobe, and Intel around the Surface Pro 3 may result in some portion of Apple’s core market at least seriously considering a switch over to the Surface Pro 3, if not actually taking the big step.

I am interested in learning further about these collaborative efforts and who the stakeholders are within Microsoft’s organization. I suspect the product marketing teams for the Surface product and for Azure have been the drivers, but perhaps groups from the sales organization have played a role, as well.

The significance of all of this, is of course, is to better gauge the likelihood of Microsoft convincing other mature ISVs (for example, Oracle, and, perhaps, even IBM) to jump on its bandwagon as it increases the intensity of its competition with Amazon, Google and Apple in their respective core markets. If the right players are in place in Redmond to continue to drive these deals, we can confidently expect to see more surprising deals like the debut of this hardware device.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Salesforce Continues Its Joint Marketing Strategy and Lands an Alliance with Workday

On September 18, 2013, Salesforce.com and Workday announced a strategic alliance promising to deliver a lot of the capabilities of the PeopleSoft component of Oracle® entirely in a cloud Software as a Service (SaaS) offer. When I put together this deal with Salesforce’s partnership with Oracle, announced in June of this year, I have to congratulate Salesforce on closing two very potent alliances.

The specifics of the deal, which I am not going to touch on here, can be found in an article, Salesforce and Workday form Cloud Alliance, authored by Quentin Hardy, and published, same day as the announcement, on the New York Times website. What piques my interest in this story is the lesson the chief marketers at Salesforce.com (probably Marc Benioff, the CEO and founder) are giving on how to leverage application scale to boost the revenue torque represented by SaaS cloud subscriptions.

As I’ve written elsewhere, the difficulty in all of this for mature ISVs is precisely the paltry torque of cloud subscriptions. It’s very hard to part with revenue models built on sales of juicy on premises software licenses for cloud subscribers who usually pay a mere fraction of these prices in the form of monthly subscription costs. But what if the same infrastructure, and the same applications, could be promoted to an ever increasing set of enterprise prospects by negotiating alliances with other ISVs with complementary product offers? From what I’ve read of this deal and the earlier deal with Oracle, I think this is where Salesforce.com is taking us.

Of course, if they succeed and start to demonstrate substantial growth in revenue, per subscriber, over the next few fiscal quarters, then mature ISVs looking for a method to successfully attain an adequate revenue base from cloud offers to fuel continued growth and profitability will have a model worth following.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


Joint Marketing Deals Look Great, On Paper, But How Do We Make Money With Them?

This is the second in a series of blog posts on the June and July 2013 quarterly earnings announcements of large ISVs in the enterprise computing software market — Oracle®, IBM®, and Microsoft®. Our interest in this topic stems from the clear market shift to cloud computing solutions from long-standing on premises solutions. Clearly this shift has had a dramatic impact on a number of related markets–sales of personal computers, computer operating systems, networking software and gear, etc. So it makes sense to look deeper into it.

Each of our 3 large ISVs pointed to an expected solution to their respective portion of the collective problem either during the quarterly earnings report, or soon thereafter. For Oracle®, the near term solution amounts to pointing current customers to leading cloud solutions from Salesforce® and/or Microsoft®.

As we wrote very early into this blog, in 2011, we have a lot of experience with Joint Marketing deals. These deals work when there is a clear win-win for each participant. One enormously successful joint marketing effort evolved from enterprise business’ burning need, in the mid 1980s, for a method to share then costly laser printers between personal computers and IBM mainframe distributed printing locations. The solution included a high quality, high speed laser printer from Xerox Corporation, an IBM mainframe hardware gateway device, and a printer sharing hardware product. The result was a lot of sales for Xerox and the manufacturer of the printer sharing device and hardware gateway.

But where’s the burning need in Oracle’s deals with Salesforce.com and Microsoft? We can’t find one. There is nothing to preclude any of Oracle’s customers from striking their own deals with Salesforce.com or Microsoft’s Azure service. Therefore, we think these joint marketing announcements have been crafted to assuage the concerns of investment analysts, than for any other reason. Oracle will have to provide more detail as to the real revenue kicker in each of the deals to convince us of a real step forward.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


Deft Joint Marketing Move by Microsoft Promises Boost to Azure Cloud Services

With Oracle positioned to make a deal, Microsoft’s Product Marketing team seized an opportunity to add more fire to its Azure Cloud offer in an effort to carve into Amazon AWS’ commanding position in the Infrastructure as a Service (IaaS) market for cloud services. Oracle customers can now use Azure as an IaaS provider. Many of these enterprise business customers are likely to already be Microsoft customers, so this Joint Marketing deal will benefit Oracle by providing it with a highly reliable cloud offer immediately available for its customer base.

Early stage ISVs can learn a lot from this joint marketing example. One aspect worth noting is as follows: These deals always include benefits for both parties. Oracle adds an IaaS offer already well received by enterprise customers — Microsoft Azure — to its offer lineup. In turn, Microsoft gains exposure to additional enterprise markets in need of IaaS. These markets can contribute substantially to Microsoft’s share of the overall IaaS market. So this deal includes a substantial amount of value for both participants.

Joint Marketing is particularly valuable for early stage ISVs looking to gain market share. So it makes sense to include “likely market impact” in a review of the business-worthiness of any product notions. Management can use this review to determine whether products make sense given development costs and a probable rate of payback. It may make sense to design products to fill a gap in a particular solution, simply to attract the attention of potential joint marketing partners already established in target markets. As we wrote earlier in this blog, in 2011, we have first hand experience with this particular strategy. So we can attest to the substantial positive impact managing product development in this manner can produce.

Earlier this year, industry analysts claimed Amazon has achieved a dominant position in the IaaS market with AWS. Certainly AWS may presently have 70% of the market, but this joint marketing deal can propel Azure into much more market share.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved