Microsoft Resellers Upbeat About 2004 Prospects

In another sign that IT confidence is climbing, a St. Paul-based research firm on Tuesday said that its survey of more than 1,000 Microsoft Certified Business Partners showed an overwhelming number anticipate revenue growth over the next 12 months.

The report, which was commissioned by Microsoft and conducted by start-up SoftwareMinds, found that Microsoft's partners expect to see more black on their balance sheets.

The vote of confidence was almost unanimous. Ninety-five percent of those polled said that 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 Microsoft's partners means good news for Microsoft, good news for the IT industry as a whole, she said."These [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 [of the IT market] is definitely behind us."

More than a quarter of the partners polled anticipate that their revenue will climb by more than 25 percent over the previous 12 months, the SoftwareMinds survey noted, while another 48 percent believe their growth will fall in the 5 to 25 percent range.

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

SoftwareMind's data noted that most of Microsoft's partners put the blame on poor past performance squarely on the shoulders of the general economic malaise: 60 percent said that the lousy 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' partner network -- the IT industry's largest, said Chapman -- has not been sitting on its hands, waiting for the good times to return.

"The biggest change that they've made in the last 12 months," she said, "is in repackaging existing products and services, and introducing new products and services. 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 single-most important factor in increasing their revenue.

Other findings of the SoftwareMind's survey included spotlighting financial services and the insurance sector as the most significant sources of revenues for Microsoft's resellers. And no surprise -- what with the bruising that Microsoft's taken in 2003 on the security side -- fully 60 percent of the partners expect to pull in more green from security products and services in the next year.