Microsoft Exec Slams Own Company Over Software Strategy

Ron Markezich, the new Microsoft sales chief for enterprises and partners in the United States, recently told the media that he believes companies spend six times more than the original cost of Microsoft software in order to get it to operate properly.

The controversial claim has lead many to believe that Markezich is downplaying the capabilities of the software his company provides. Said Markezich, "Every dollar you spend on software from Microsoft, you spend six dollars trying to get it to do anything."

No doubt, this admission is quite surprising, especially considering that Markezich's position at Microsoft is to convince US enterprises and partners that Microsoft software is the best option moving forward.

Value-Added Services Account for Cost

The price breakdown of Markezich's claim is a little more telling, however. For example: even though partners are responsible for over 90 per cent of Microsoft software sales, a significant amount of income cannot be made from simply marking up the software.

In response to this, most partners attempt to cash in on value-added services such as software installation, helpdesk support, license management and systems integration. All of this accounts for Markezich's 6:1 ratio. (Source: businessinsider.com)

Online Services Strategy: The Better Option

To understand the reason why Markezich would downplay his company's software has a lot to do with the fact that he has always been a supporter of Microsoft's online services strategy.

During his tenure as Microsoft CIO (Chief Information Officer), Markezich went on to help lead the product group that created cloud computing-based Microsoft Online, which includes hosted email, collaboration and other services.

Analysts are certain that his "controversial claim" was nothing more than Markezich making the point that while Microsoft online services might appear to cost more than an on-premise software license, over time, customers will save more money than would have been spent installing and maintaining that software on premise. (Source: yahoo.com)

In the end, some critics suggest that Markezich's statement was nothing more than another example of Microsoft making new technology look great at the expense of their aging, pre-existing software strategy.