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Microsoft highlights channel role in driving Office 365

Microsoft has highlighted the role that an expanding channel has played in driving sales of Office 365 into the SME market

Microsoft’s channel, one of the largest globally, contain led to expand in its third fiscal quarter as the vendor saw more activity around Office 365 in the SME space.

The vendor now has around 85,000 transacting partners selling the cloud based Office suite to small customers and as a result its revenue from that product line increased.

As well as having the channel to thank for pushing Office 365 there was also some concerns that more could be done with its Lumia products, where weak sell-through left high levels of inventory being held by partners.

The expectation is that the inventory will still be an issue that will feature in the Q4 numbers and year on year revenue declines will increase.

Sluggish phone sales along with the ongoing impact of a weakened PC market were two of the main problems in a quarter that saw revenues decline by 6% to $20.5bn. Net income also dropped by 25% from $5bn to $3.8bn.

Market watchers had been expecting drops as Microsoft continues to transition to cloud, which is having some negative impact on margins.

But overall the response from Satya Nadella, Microsoft CEO, was upbeat in an analyst call and contained plenty of mentions of the channel and the plans it had for partners and developers.

“We're making Office 365 more than a world-class productivity and communications service. It's becoming a growing platform for developers. There is an incredible amount of value developers can deliver by harnessing the data in this platform,” said Nadella.

On the cloud front he added that it had increased Azure revenue by 120% and the line on the graph was continuing to head upwards.

A hint of the WPC agenda

When asked about what the plans were to keep the channel momentum that has been seen in cloud and the SME space going, Nadella gave a hint to what would be some of the themes at the worldwide partner conference in July.

“Across all of our product lines, whether it be Windows or whether it be Office 365 or Azure, developer momentum, ISV momentum is super important priority for us, both in terms of our developer evangelism, our product engineering teams, as well as everything that we will do to even create success for our partners through our field sales organization is a top of mind priority,” he said.

“All of our leadership team is very focused on. So you will only increasingly see us deliver more design wins there. In fact, I'm looking forward to our partner conference to talk much more about what it is that we will be doing in the coming year to drive more success for our partners and in particular ISVs.,” he added.​

“We are innovating in new areas to help organisations digitally transform. We're expanding our competitive strength in hybrid computing. We're generating opportunity for developers and partners,” he said.

“Perhaps the biggest impact we can make is to empower developers. To this end, we're making Windows and Azure the very best environments for developers who want to build applications that run across multiple platforms,” he added.

He also provided an update on the progress of Windows 10. Having revealed earlier this month that the OS is now being used on 270m devices Nadella as also upbeat about its progress in the corporate market with many starting to make the move to use the software.

“We see this trend across our enterprise customers with 83% of them in active pilots today. We believe enterprise deployments will continue to drive up the over 270 million monthly active devices running Windows 10. The number of Windows 10 devices is twice that of Windows 7 over the same time period since launch,” said Nadella.

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