Microsoft Looks To Partners To Increase MBS Revenue in 2006
- By Scott Bekker
Microsoft is telling investors that partners will be key to the success of
the Microsoft Business Solutions (MBS) division.
In Microsoft's latest 10-Q filing on Thursday with the Securities & Exchange
Commission, the company wrote that a plan "for facilitating our partners
to provide customized vertical solutions" is one of three major initiatives
for improving the division's revenues in fiscal 2006 compared to fiscal 2005.
MBS includes revenues primarily from Microsoft's ERP, CRM and retail solutions,
and also includes the Microsoft Partner Program.
The division showed $181 million in revenue for the quarter that ended Sept. 30, up from $156 in Q1 2004. Operating losses decreased from $31 million to $12 million.
While the division's software revenues rose 18 percent, other factors, including
an investment in the partner channel, prevented the division from rising to
profitability in the most recent quarter, Microsoft said.
For example, the company directly attributed a 3 percent decline in services
revenue to its initiative to encourage partners to provide more of those services.
In addition, investments in the Small and Midmarket Solutions & Partners
group offset a reduction in headcount expenses that were driven by a drop in
stock-based compensation expenses.
On the other hand, revenues derived directly from partners helped the division
perform at the level it did this quarter. "Performance from our ERP and
CRM solutions and MSPP [Microsoft Partner Program] subscriptions resulted in
growth of 21 percent in license and 16 percent in enhancement revenue,"
The partner investment is one of three pillars in Microsoft's plans to improve
performance for MBS in fiscal 2006. The company is also looking to the launch of the
next generation of MBS products, called Microsoft Dynamics, and broader geographical
Scott Bekker is editor in chief of Redmond Channel Partner magazine.