Microsoft Confirms Delta Surface Deal Is Direct

Microsoft confirms the deal to supply Delta Airlines with thousands of Surface tablets is a direct sale, adding fuel to the controversy over when the homegrown tablets will be made available to the general channel.

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[caption id="attachment_35360" align="alignright" width="300"]A Delta pilot demonstrates how the Microsoft Surface tablet will be used in flight operations. A Delta pilot demonstrates how the Microsoft Surface tablet will be used in flight operations.[/caption]

Microsoft Corp. confirmed to Channelnomics that its deal to supply Delta Airlines with thousands of Surface 2 RT tablets as a replacement for bulky flight manuals was done without the assistance of channel partners. The admission comes as Microsoft continues to be evasive over when its homegrown tablet will be released to the general channel for resale.

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Six months ago, Microsoft and Delta announced a deal in which the airline would field Surface 2 RT tablets running Windows 8.1 to 11,000 pilots, replacing heavy flight manuals with the digital platform. The program, the airline said, would reduce weight and save millions of dollars in fuel consumption. Microsoft has since touted the deal as an example of how Surface is beating rivals Apple iPad and Google Android in the enterprise.

"We set out to make Surface the most productive tablet, so we couldn't be more excited to help Delta pilots be more productive and help the environment," said Brian Hall, Surface general manager at Microsoft, in September 2013 when the announcement was made. "This announcement demonstrates Delta's absolute commitment to bringing the best in technology innovation into their flight operations."

While the Delta deal is one of the largest commercial Surface deployments, it’s being done without the assistance of channel partners. After several requests by Channelnomics, Microsoft admitted this week the Delta deal was struck direct with Microsoft and no partners are involved in the fulfilment or ongoing support.

Solution providers, already chaffing by Microsoft’s continued withholding of Surface from the channel, suspected the Delta deal, as well as other large commercial sales touted by Microsoft, were direct. Microsoft’s admission is more than a confirmation; it reinforces negative perceptions that Microsoft is purposely cutting partners out of Surface opportunities.

Microsoft released Surface in October 2012 with the release of Windows 8, its first operating system designed for touch-based devices. Windows 8 was intended to get Microsoft into the tablet game with Apple Inc., the device market leader, and Google Inc., the platform market leader. Surface was Microsoft’s emulation of the integrated product and go-to-market stack pioneered by Apple.

From the beginning, Microsoft had a weak channel story for Surface. At the Worldwide Partner Conference in 2012, months before the Surface launch, Microsoft evaded distributors requests for information about distribution plans or the need for support. Surface wasn’t even on display even though Windows 8 was everywhere.

When Surface launch, Microsoft said it wasn’t ready for channel sales and support. It wasn’t until sales tanked out of the gate that Microsoft added retail resellers to the strategy. In July 2013, Microsoft authorized a series of direct market resellers -- or those specialized in volume sales -- to resell Surface. Today, about 130 DMRs in 29 countries are selling Surface.

Microsoft points to these DMRs, which includes companies like CDW and Insight, as examples of channel sales. However, Microsoft has more than 600,000 resellers worldwide.

Inexperience is the reason Microsoft gives for not expanding channel sales of Surface. Global channel chief Phil Sorgen recently told Channelnomics Microsoft is deliberate in its approach to developing a Surface channel strategy and would not rush to release the product prematurely. In other media interviews, he has said Microsoft’s experience with hardware products, such as Xbox and peripherals, are different from Surface.

While Sorgen is correct that Surface is different, solution providers find it hard to believe that Microsoft cannot articulate a strategy or even a timeline for when Surface will be made available.

Microsoft fanned partner discontent in December 2013 when it released a survey about how solution providers would feel about reselling Surface under different conditions, such as not being able to return unsold devices and destroying unsold inventory. Solution providers saw the questions as Microsoft gauging whether it could stuff the channel to inflate sales.

Sorgen has been on a global media tour, talking with channel press about his priorities and philosophy. At every meeting, the Surface issue comes up, as it's a reflection of the growing frustration and discontent solution providers have with Microsoft’s perceived turn away from the channel. While Microsoft needs to trumpet examples such as the Delta deal to demonstrate the market acceptance of the Surface tablet, it’s doing so at the risk of fanning partner ire.

Reports say Microsoft is readying a new cover typepad for Surface that includes an external battery. The power-boosting accessory, some analysts say, is positioning Surface as a more apt notebook replacement that will make the device more palatable to business users. It will also make Surface more marketable, and that elevate discontent of Microsoft channel partners locked out of the Surface opportunity.

Despite media inquiries and partner complaints, Microsoft isn’t moving any quicker to clarify when Surface will be released to general channel distribution. Sorgen is consistent in saying Microsoft will not release Surface to partners until it felt ready with support and logistics. When asked by Channelnomics which would come first, Surface 3 or general channel availability, Sorgen repeated the official stance.

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