How it Began

By Sharon Linsenbach  |  Print this article Print

Few doubt Gates influenced Microsoft’s channel philosophy, but the sheer bulk and inertia of a 400,000-strong partner program will roll on with or without the company’s founding father.


Industry experts say Microsoft's channel really hit its stride with the Windows 95 and 98 releases.  As demand for the operating systems increased and Microsoft blew competitors out of the water, the company needed to be able to scale much more quickly than it could simply by selling directly to consumers and businesses.  Enter the channel. 

"In Microsoft's heyday, they had their best successes in the enterprise, when everyone was deploying Exchange servers, when people were moving to Windows 95 and 98," says Bahl.

As a result, many VARs also fared exceedingly well during those high times.

"At the beginning, with those big OS releases, Gates, Ballmer and all of the management team were very aware of the role the channel played," says Michael Cherry, analyst for research firm Directions on Microsoft.  He adds that the relationship between Microsoft and its channel organization has always been symbiotic.

"Microsoft really is a company most people don't deal with directly," Cherry says. Consumer products are sold through retail channels and preinstalled on hardware from OEMs, and no matter their size, businesses deal mostly with Windows VARs, he adds.

"Just as two examples, Microsoft's CRM and ERP packages are so complex and daunting, it's difficult to see how any company, large or small, wouldn't want to bring [a VAR] in and get help from someone who has experience with the products, someone who's done this before," Cherry says.

Of course, without the channel, it's fairly certain Microsoft could have sold in other ways, including direct, but perhaps wouldn't have been so profitable, says Cherry.  And as for the channel, well, he says even without Microsoft, there were plenty of other options to keep VARs busy. 

"If not Windows, it's a safe bet to say something else would have come along. There were plenty of other competitors, including Apple and Commodore," he says, as hard as that is to imagine now.  Cherry adds that there were quite successful VAR channels that sprung up around other computer systems, including Novell’s Netware, for example.
