Microsoft Surface Is a Channel Tease

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Microsoft’s decision to let “some” channel partners resell Microsoft Surface tablets is a tease, given the constrained distribution and choice of volume partners. The question for Microsoft at the Worldwide Partner Summit next week: Why is it taking so long to bring Microsoft Surface to the channel?

surface 2The Surface is finally making its debut in the channel. Microsoft Corp. announced yesterday it will allow “select” partners to resell the Surface and will expand its application development ecosystem.

And it’s just a tease. For a channel-centric vendor, Microsoft has dithered about Surface availability to partners for more than a year. The limited authorization to select partners doesn’t mean Surface is really available to the channel, but rather still positioned as a volume sales product that remains outside the reach of the average Microsoft partner.

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While Microsoft is trumpeting the channel release of Surface, authorized partners are restricted to CDW, CompuCom Systems Inc., En Pointe Technologies, Insight Enterprises Inc., PC Connection Inc., PCM Inc., Softchoice, Softmart, SHI International Corp. and Zones Inc. – all but one are DMRs focused on volume sales.

The intent to start with DMRs and high-volume partners is a sign Microsoft wants to accelerate sales of Surface, which has sold an estimated 1 million units since its release last October. While Surface sales are respectable, they pale in comparison to Aple Inc.'s juggernaut iPad that sold 23.5 million units in the fourth quarter of 2012 alone.

Jenni Flinders, vice president of the U.S. Partner Group at Microsoft, heralded Surface coming to the channel, saying that the time was right.

“When Brian Hall, general manager of Microsoft Surface, came to me and said, ‘Jenni, Surface is ready to come through the channel, and you have an innovative partner ecosystem that can sell Surface to organizations of all sizes,’ I knew that our partners and the U.S. Partner Team were ready to make this a reality,” she wrote.

What's Changed with Microsoft Surface?

At last year's Microsoft Worldwide Partner Conference in Toronto, Microsoft Surface was the reclusive guest of honor. The Windows 8 tablet would make brief appearance on the main stage and was much sought after in the exhibit hall and technical sessions, but made virtually no major appearance.

Everyone in the Microsoft community and general IT market knew Surface was coming, as Microsoft planned to make it a cornerstone of the Windows 8 launch. But Microsoft didn't speak about its creation or how – if at all – it would be sold through the channel.

One of the things that changed is distribution. At WPC last year, distributors pinged Microsoft about its logistics plans for Surface; Microsoft was near-silent. THe company chose to launch Surface through its direct retail and Web site sales channels; only after the sluggish holiday start did Microsoft expand sales to Best Buy and Staples.

With distributors Ingram Micro, Tech Data and Synnex now support Surface logistics, Microsoft may finally have the pick, pack and ship capacity to support the channel.

But why only DMRs selling Surface?

At next week’s partner confab in Houston, Microsoft will offer partners steeply discounted Surface units. Some observers speculate this move is a prelude to the Surface coming to the channel. However, others believe Microsoft is trying to burn off inventory in advance of the release of the second generation of the tablet.

The question still remains: Why does Microsoft continue to constrain Surface channels sales when partners large and small have been clamoring to add the product to their portfolio?

Microsoft Surface sales are sluggish, at best. Microsoft needs to expand its market share to compete and recapture leadership in mobility against Apple and Google. The best way of accelerating sales and market coverage is through the channel, and Microsoft has the largest channel in the world. If every partner sold just 10 Surface units in a quarter, Microsoft would post 4.5 million units shipped.

Yet, Microsoft dithers.

Through this limited expansion, Microsoft is more likely to generate more channel angst than satisfying the throngs wanting to take a potentially lucrative product to market.

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