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Todd Katcher

Todd Katcher Managing Partner

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What can you learn from Microsoft and Google?

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Two weeks ago, Microsoft gave the middle finger to their partners - not once, but twice. What can you say -- they used both hands.

Meanwhile, Google did the exact opposite, embracing their partners and letting them feel comfortable with the future working with the company.

I guess Google's motto of "Don't be evil" is back in play.

Let's recap. Microsoft launched their own tablet, called Surface, running on Windows 8 and Windows RT. It was manufactured by MS and will be sold by MS. While MS has a history of making accessories such as mice and keyboards, it hasn't make computers, tablets or phones. On occasion, some companies have made reference devices to show the capabilities of new products. MS and Intel has done this.

In this case, Microsoft's goal is clear - they intend to lead the pack and release the Surface Tablets to compete directly with Apple, looking to own the full user experience. The difference in this case, is that MS charges it's partners up to $100 per license to use the Windows Operating System. Since MS isn't going to charge itself this amount, it already had a profit margin greater then any of it's partners ever could accomplish.

Secondly, Microsoft officially came out and said the recent phones that their partners were pushing with the new Windows Phone operating system will not get the Windows 8 update. (LINK) Instead, they will get 7.8 and will be left behind beyond that. Reports showed that Nokia spent over $250M on marketing of their 900 phone. ATT (LINK) made it a flag ship phone in their store, training their staff, and redirecting marketing for other partners to make room for Microsoft phones. Now, any momentum those marketing efforts created is now lost as their partner now made those investments obsolete.

How would you feel if your partner treated you this way? Making you spend money on marketing and then turning their back on you. Or creating a product to compete with yours, only to charge you up to $100 more for the privilege of using their device.

Now Google has done the complete opposite. At Google's annual developer convention (LINK), they announced a tablet device running the latest build of Android - Jelly Bean - called the Nexus 7. It wasn't built by Google, but by Asus. While Microsoft charges its partners for licenses, Google gives their operating system code away for free in order to help promote their ecosystem of products (gmail, docs, play store, etc).

The new tablet vents some of Google's partner frustrations by providing a vehicle to push the next operating systems out quicker on tablets, just like it does on phones - ie. the Google Nexus. Google is noticeably frustrated that it's partners are fragmenting the Android system by not updating their phones to the latest feature set and operating system. This device, although not technically a reference device, shows consumers what is possible with the form factor, hoping to put pressure on their providers.

By utilizing one of its partners to make the Nexus tablet, Google also followed up on a promise it made to it's hardware partners when Google purchased Motorola. When that acquisition happened, partners were nervous that Motorola would become the manufacturer of choice for Google hardware and get first access to updated software. Google promised that it's purchase of Motorola was for the patents to protect it's partners against lawsuits.

When assessing your business partners, are you keeping your word?

When you tell a vendor that you appreciate what they do, do you mean it?

When someone bends over backwards to help you out, do you return the action?

When a vendor cuts their price to meet your budget, do you consider that when you have further budget cuts?

Microsoft isn't moving at the pace of business today. Regardless of how great of product Surface is, without partner support -- they will be the only ones making a Windows device. That hasn't been their strategy thus far, and unless it changes, the impact of their decisions may have an unprecedented outcome.

When considering a business partner, consider how they would react when the tide gets a little bumpy. And then remember, that it may be your tide that may be bumpy some day and it will be your decision to determine whether to act like Microsoft or like Google.

PS> The executive at Microsoft responsible for Partner relations, resigned from his position this week. Of course the line is that it was planned, but how would you feel in his shoes after spending years building relationships with partners only to have MS sweep the rug out from under you?   (LINK)

Todd Katcher
Digital Dealership System

c: 615.669.5244
twitter: @digitaldealers


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