Microsoft COO Turner Rubs Salt Into Surface Wounds With Retail Store Invitation

Microsoft COO Kevin Turner Wednesday added insult to injury by inviting solution providers to bring customers to Microsoft retail stores, where Surface Tablets are sold direct.

"You should feel free to use our store as an extension to your office," Turner told partners in a keynote address before thousands of partners at the Microsoft Worldwide Partner Conference in Houston, Texas. "Our stores [are] an office for you, and they're a big asset to us. Bring your customers there."

At the same time, Turner told partners that Microsoft is expanding its worldwide retail store footprint dramatically from 73 stores to 101 stores by the end of its fiscal year 2014.

[Related: Microsoft's Ballmer Avoids Surface Channel Strategy In Partner Conference Keynote ]

"What is he talking about?" asked Bob Venero, the CEO of Future Tech, a Holbrook, N.Y., Microsoft partner that recently closed a 2,500-unit Apple iPad deal with JetBlue. "How can someone like Turner ask us to bring customers into a Microsoft retail store where they can see Surface tablets we can't even sell? That is ridiculous." He called the Turner comments "yet another slap in the face" to Microsoft solution providers anxious to sell Surface.

Venero, who chose not to attend the Microsoft Worldwide Partner Conference, said he was also dismayed that both Turner and Microsoft CEO Steve Ballmer refused to directly address the issue of why the very partners that made Microsoft successful still cannot sell Surface. "It's amazing to me that they didn't bring it up," he said. "If they are saying they are going to be a device and services company, how do you not take and put Surface into the hands of the solution providers that are going to make you successful as a device and services company."

Venero's message to Turner and Ballmer: "I would like to understand the thinking that solution providers like Future Tech can benefit from utilizing a Microsoft retail store for a corporate customer. To add insult to injury there are products that are exclusive to Microsoft and its select device partners that I don't have the ability to sell. I would love to talk to a Microsoft executive on the channel mentality and direction because it is not being communicated to partners like Future Tech."

NEXT: Partner: Microsoft Is Not Our Only Choice

One CEO for a Microsoft partner, who attended the conference but did not want to be identified, said he was also stunned by Turner's comments. There may be some small partners that view the ability to use the Microsoft retail store as an added benefit, but it misses the mark completely for enterprise partners that have made big investments in network operations centers, technology labs and even multimedia conference facilities used for customer strategy briefings, said the executive.

"Microsoft isn't the only choice we have," said the CEO. "It's not even my first choice. I don't know why I would ever consider using a Microsoft retail store for a customer meeting. Microsoft doesn't understand that it is not one size fits all when it comes to partners. Microsoft has a big blind spot: There is a lot of market between those small guys at the bottom of the market attending the conference and the LARs [Large Account Resellers] at the high end of the market."

"The real elephant in the room is how is Microsoft going to drive demand when they have got a fundamental problem with their channel strategy as a result of conflict between LARs [selling Microsoft software licenses and now Surface devices] and partners selling business solutions," said the executive.

If Microsoft intends to be a top tablet and device supplier, then it better get its channel act together or it risks sending partners en masse into the arms of device suppliers like Google offering Chromebooks. "They are headed to the wrong place," said the executive.

Microsoft solution providers already upset that Microsoft was selling the Surface direct from its retail stores and its website got another jolt just one week before the annual partner conference with the surprise launch of the Microsoft Devices Program, which provided just 10 Microsoft LARs the ability to sell Surface. That amounts to less than 0.01 percent of Microsoft's North American partner base and an even smaller fraction of the company's 640,000 partners worldwide that are being asked by Microsoft to sit on the Surface sidelines.

Some Microsoft partners suspect that part of the problem is the retail roots of Turner, a 19-year Wal-Mart veteran who ended his career as president of Wal-Mart's Sam's Club before joining Microsoft in 2005.

"Turners' DNA is Wal-Mart," said one enterprise Microsoft partner, who did not want to be identified. "Maybe he believes he can disintermediate solution providers like Wal-Mart did with local stores."

The CEO for another longtime Microsoft enterprise partner, who did not want to be identified, said he is disturbed by Microsoft's Wal-Mart mentality in bringing Surface to market. He said it's a far cry from the business solutions model that Microsoft should be focusing on with Surface. "It makes me sick to my stomach," said the CEO.

Microsoft Channel Chief Jon Roskill told CRN that the decision to limit Surface distribution was a "collective decision" and that Turner was not "day to day" on it." Tami Reller [Windows CFO and CMO] is responsible for Surface sales and marketing," said Roskill. "There is also myself. [COO] Kevin Turner is very clearly aware, though he's not day-to-day on this. Vahé Torossian [corporate vice president, Worldwide Small and Midmarket Solutions and Partners Group] has been in on these meetings. And Chris Capossela [Microsoft CMO] in the consumer channels group. Those are the main players. "

Mont Phelps, the CEO of Waltham, Mass.-based NWN Corp., No. 90 on the SP500 and a top Microsoft enterprise partner who attended the worldwide partner conference, said he was impressed by the breadth and depth of the more than 16,000 partners attending the conference. "It's really impressive that Microsoft is able to bring together such a vast collection of channel partners to engage with them," he said. "Microsoft has a lot of smart people. They are going to make the right channel decisions."

PUBLISHED JULY 10, 2013