‘Surface’ to Cloud : Microsoft Offers Hardware and Software as a Service (SaaS)

At the recently held Microsoft’s Worldwide Partner Conference (WPC) in Toronto, the company demonstrated continued commitment to the Surface hardware product. There has been skepticism on whether Microsoft will continue to invest in hardware under Satya Nadella’s leadership. Yusuf Mehdi, Corporate Vice President, Windows and Devices Group wrote in his blog :

We continue to invest in our Surface family of products because we have seen how innovative devices shift people’s behavior, inspire ideas, catalyze collaboration, accelerate progress, and transform business. And in the past year, the Surface business has grown from generating $1B in revenue in a year to $1B in revenue per quarter. With our growing portfolio, we are creating not just great devices, but breakthrough categories that open up a world of new opportunities for partners to build capabilities in new areas, and to create solutions and services for customers. This year, we are investing in programs that increase partner revenue and profitability.

So what is Microsoft offering? 

nadella1Satya Nadella’s message in his keynote and the theme of the conference was digital transformation. As per Yusuf, digital revolution also means the traditional workplace environment is changing and people are working remotely and need to be productive from anywhere.

To enable mobility and productivity, Microsoft announced the expansion of the Surface Enterprise Initiative with a set of new partnerships and programs to empower customers.

Screen Shot 2016-07-22 at 9.12.10 PMMicrosoft introduced Surface as a Service, an initiative that would allow Microsoft’s Cloud Solution Providers (who are also Surface Authorized Distributors) to offer Surface devices through a managed service offering. Replicating the cloud subscription model with hardware will help customers have the latest Surface devices on an ongoing basis. In combination with Office 365, Microsoft partners would be able to serve customers with a complete portfolio of products ranging from mobile Surface hardware with Windows 10 and the ability to access cloud based services such as Office 365 and other Software as a Service (SaaS) offerings from Microsoft and other ISVs. It is a good strategy to tie the portfolio from Surface to Microsoft Azure. 

Reseller and OEM Expansion

Microsoft also announced the expansion of Surface Multi-National Purchasing Program through CDW, Insight, SHI and Zones who would carry Microsoft Surface devices and accessories. This reseller strategy is in addition to the OEM partnership Microsoft announced in 2015 with Dell as part of the Surface Enterprise Initiative. Yusuf also wrote about the expansion of the Surface Enterprise Initiative with two new partnerships with IBM and Booz Allen Hamilton to deliver industry specific solutions.

Hardware leasing programs are not uncommon in the PC industry and this announcement is not different from other programs if you only consider hardware. The news is more impactful if you consider both hardware and software product suites being offered as a service. This will allow enterprises to move from a Capital Expenditure (CAPEX) model to an Operational Expenditure (OPEX) model and refresh their hardware to the latest Surface products from Microsoft without having to carry inventory and use Microsoft’s productivity software on an as needed basis.

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