To compete in the enterprise with the likes of IBM, Oracle, SAP and Salesforce.com, Microsoft has to take a more direct approach.
Then there's Salesforce.com, chewing up mindshare across a broad swath of the market that Microsoft is targeting. And waiting in the wings is Hewlett-Packard, now in the hands of a seasoned software executive who understands these opportunities as well.
This massive market realignment leaves Microsoft out on a limb if it only relies on its fabled channel to do the heavy lifting for all the new products and services that S&S and Azure+Dynamics represents. While the partner channel has been beefed up by the presence of the global SIs in recent years, the idea that Microsoft can compete directly with IBM, Oracle, Salesforce, SAP and HP in the coming market realignment with just its channel partners must have struck Ballmer as a little iffy. And it may have seemed that, for all his talents, Muglia was not the one who could take Microsoft to this new level.
What this realignment means inside Microsoft is a shift in what STB is and does in support of the rest of the Microsoft vision. STB will have to play more of a supporting role, more the loyal commodity stack provider, in a high-stakes, high-value market where everyone (except SAP) has a rapidly commoditizing stack offering on which each vendor must position high value-add assets like enterprise software and services.
The stack components don't go away -- they become an essential part of the sale -- but they have to take second fiddle to a higher-value offering. That offering in Microsoft-land will not come from STB, but from -- and here's where I go out on a limb -- a realigned Microsoft that is selling a much broader strategic vision of what the enterprise wants and needs: a vision much more like Oracle and IBM than ever before.
I may be wrong that Muglia's departure is related to this new market reality. But if it isn't, then another shoe will drop soon that defines the beginning of such a realignment. Microsoft has never been in a more precarious position in its fabled history -- I haven't even mentioned the Google threat or the Apple threat, or the smart phone and tablet challenge -- and it has never been better positioned to pull ahead of its enterprise competitors with a new focus on Azure and Dynamics as essential components of Microsoft's own stack strategy.
The manner of Muglia's departure and Ballmer's careful wording may have led me to go out on a limb about the particulars of the cause and effect at play here. But one way or another, Microsoft needs to shift to a more direct focus on the enterprise -- direct as in a direct presence in the executive suite -- or watch its latest opportunity fall prey to a slew of competitors that get the enterprise opportunity in a much more direct way.
Josh Greenbaum is principal of Enterprise Applications Consulting, a Berkeley, Calif., firm that consults with end-user companies and enterprise software vendors large and small. Clients have included Microsoft, Oracle, SAP and other firms that are sometimes analyzed in his columns. Write him at email@example.com.