Microsoft Resellers See Better Times Ahead

A Microsoft-commissioned survey by research firm SoftwareMinds says the large majority anticipate revenue growth next year.
A research firm said Tuesday that its survey of more than 1,000 Microsoft Certified Business Partners showed an overwhelming number anticipate revenue growth over the next 12 months—another sign that IT confidence is climbing.

The report, commissioned by Microsoft and conducted by startup SoftwareMinds, found that Microsoft's partners expect to see more improvement on their balance sheets. The vote of confidence was almost unanimous: In all, 95% of those polled said they expect revenue growth over the next 12 months.

"This is great news for Microsoft," said Kirsten Chapman, marketing vice president at SoftwareMinds. "Microsoft relies more on its business partners than most other top-tier vendors; unlike some competitors, they don't really sell direct. The partners are Microsoft's sales channel."

The optimism among its partners means good news for Microsoft--and good news for the IT industry as a whole, she said.

The partners "represent a huge revenue stream for Microsoft," Chapman said. "And in the last six to nine months, we've seen a complete shift in IT confidence. The bottom is definitely behind us."

More than a quarter of the partners polled anticipate that their revenue will climb by more than 25% over the previous 12 months, the SoftwareMinds survey noted, while another 48% say their growth will range between 5% and 25%.

That's a major shift from the last dozen months. Of the 1,000-plus partners that participated in the study, 43% said they had experienced flat or declining revenue in the 12-month span that ended in June 2003. Nearly 25% claimed that they had been unprofitable during that period.

SoftwareMinds' data noted that most of Microsoft's partners put the blame for poor past performance squarely on the shoulders of the general economic slump: 60% said the economic climate was the major factor in poor sales of products and services.

"My suspicion, and it's only a conclusion, not out of the data, is that the partners believe their revenue will grow because they see the economic climate improving," said Chapman.

But Microsoft's partner network--the IT industry's largest, said Chapman--hasn't been sitting around waiting for the good times to return.

"The biggest change that they've made in the last 12 months is in repackaging existing products and services, and introducing new products and services," she said. "They've been re-evaluating their business, asking themselves 'What are we really selling here?' and 'How are we going to stay alive?'"

According to the numbers, more than half of the partners surveyed said that adding new products and services was the most-important factor in increasing their revenue.

Other findings in the SoftwareMinds' survey included spotlighting financial services and the insurance sector as the most significant sources of revenue for Microsoft's resellers. And 60% of the partners expect to pull in more revenue from security products and services in the next year.