Microsoft (MSFT) recently announced plans to sell Surface tablets to enterprise customers, including educational institutions, through a two-tier partner program called Microsoft Devices Program (MDP). The program authorizes distributors to sell Surface to a newly designated group of device-authorized large account resellers (LARs). Per the announcement, in the US, Surface will be resold through three authorized distributors (Ingram Micro Inc., SYNNEX Corporation, and Tech Data Corporation) and 10 high volume LARs. MDP is likely to be expanded to select partners in 28 other countries by the end of September 2013. As part of the initial go-to-market model, Microsoft is not including its solution providers in the program.  

Based on recent media reports, Microsoft’s US partners — solution providers in particular — have expressed dissatisfaction with Microsoft’s selective approach towards partnering for Surface. Solution providers feel Microsoft is ignoring the opportunity to deliver “wrap-around services” around Surface, which they could have delivered.

I believe that in the near term, Microsoft is correct in limiting access; but, in the longer term, it will need to open up to other partners, including solution providers that can help Microsoft deliver Surface-based solutions as a means to ensure differentiation in the tablet market and drive margins. Microsoft needs to follow some key guidelines as part of Surface’s go-to-market strategy if it wants to stand above the crowd:

  • New product, new program, and new lessons. Most new partner programs aren’t perfect the first time out and this is Microsoft’s first foray into a formal hardware-centric partner program. With limited partnerships, it is much easier and quicker to gather feedback and make necessary program tweaks. Based on its limited indirect go-to-market model in the US and the subsequent lessons learned, Microsoft should be flexible with its approach moving forward, which might need to be adjusted and localized as they enter other markets/countries.  
  • Fewer, but more profitable partners.Microsoft’s announcements illustrate a clear attempt to ensure that Surface does not become a commodity product in the hands of a large number of resellers. If Microsoft were to open up the resale market in the enterprise space to all the partners, most would start seeing shrinking margins in the long run. With less competition, Microsoft’s selected partners are more likely to remain both healthy and wealthy.
  • Sell solutions, not devices. Microsoft should ultimately focus on creating an ecosystem of partners (distributors, resellers, ISVs, SIs) that can add value to Surface, including the delivery of integrated solutions to enterprise customers. Solutions can include vertical-specific applications, scenario, or use-case specific security features, collaboration features pre-loaded or customized for the device/organization. Launching a separate ISV program for Surface, AppsForSurface, is definitely a step in the right direction but Microsoft also needs to include its solution providers in order to deliver high value in addition to its device. Currently, both Apple and Google (and its other Android-based devices) are really focused at consumers who use Surface for their work; but, they are really not an enterprise-focused device.

Microsoft will eventually need to open the market to a larger base of partners, including its solution providers. This is critical for expanding geographic reach and targeting the enormous base of mid-market and SMBs, while also driving increased value by bundling Surface with business solutions. To do this, Microsoft must create a collaborative platform to enable its ecosystem of partners to come together and deliver high value joint solutions to enterprise customers. In the near term, I believe Microsoft is correct in being selective in its partner recruitment process and focusing on high-volume resellers to build market share as the critical first step in competing more effectively in the tablet market.