Is Microsoft the Managed Services Market’s Biggest Enemy?

Channel Strategy
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MSPs fear the software giant, but it may be the managed services platform vendors that have the most to lose.

Over the years Microsoft’s commitment to channel partners has been pretty much unassailable, regardless of what you may think of the company’s products or its inclination to throw its weight around.

But as the managed services market matures, you have to wonder how long the world’s largest software company plans to sit on the sidelines. And while you’re at it, you might chew on this: When Microsoft finally gets serious about managed services, will it do so as a partner to the channel, as a competitor or both?

Based on the vendor’s track record, you would give Microsoft the benefit of the doubt and speculate that whatever managed services efforts the vendor throws its weight behind, they will be in partnership with the channel.

Of course, Microsoft’s track record won’t stop some MSPs (managed services providers) from fretting. Channel Insider found in a survey conducted last summer that MSPs view Microsoft as their biggest competitive threat, with 37 percent of respondents naming the vendor as a threat. Not even Dell inspires as much fear, with 21 percent of MSPs naming it as a threat.

But MSPs aren’t the only companies that should wonder if they ought to be nervous about any potential moves by Microsoft into the managed services space.

Perhaps more justified in sweating it are the companies that since the turn of the millennium have carved out respectable positions in the market with their remote monitoring and management platforms.

I am talking about vendors such as Kaseya, Nimsoft, N-able Technologies, Level Platforms, Zenith InfoTech and TriActive—all of which do all or some of their business through channel partners.

Each of them will tell you they feel confident in their technology and market positions to be able to fend off any incursion by Microsoft into the managed services space. No doubt, it would take some doing by even the giant of Redmond to displace some of these well-entrenched players. Those of us who have been around long enough remember what happened to Netscape, once the king of Web browsers, when Microsoft decided to embed Internet Explorer into the Windows operating system. Today, IE is by far the dominant browser; Netscape is a museum piece.

As the maker of the operating system that runs an estimated 85 percent of the world’s desktops, Microsoft has the ability to make life hard for other software companies if it chooses to do so.

So that’s one concern for managed services platform vendors. Another has to do with partner loyalty.

MSPs have a history of switching from platform to platform before finally settling on one they like. As I reported in June, MSPs have switched their loyalties over the years from one vendor to another as a result of unmet expectations and unforeseen complications in standardizing on a platform.

A Channel Insider survey conducted over the summer found that 25 percent of MSPs have switched platforms three times, 21 percent once and 18 percent twice. Seven percent of participants reported that they have switched platforms a staggering 10 times. Yes, there are enough platforms out there to switch that many times.

Reasons cited for the round robin included tools not performing as expected and being too difficult to use, lack of interoperability, and poor vendor support and maintenance.

It’s important to note that managed services vendors have come a long way in supporting partners through training, technical assistance and the sharing of best practices. And they will have to remain focused on partner support if they are to stand their ground should Microsoft barrel into the managed services space.

A move by the software behemoth is expected in short order. Word is that Microsoft since the fall has been working on an MSP initiative. It’s possible that the company eventually will tweak its System Centre Management, now targeting corporate IT departments, into a service for channel partners. Presumably, we will soon find out.

Meanwhile, MSPs and platform vendors should do all they can to build loyalty in their constituencies (just in case).