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Microsoft WPC 2015: Local channel cashes in as Cloud and mobility drive higher margins

Microsoft WPC 2015: Local channel cashes in as Cloud and mobility drive higher margins

“Like all major technology shifts, there will be winners, losers and new leaders."

Ananth Lazarus, Partner Sales Lead, Microsoft APAC

Ananth Lazarus, Partner Sales Lead, Microsoft APAC

Channel partners in Asia Pacific with a strong focus on Cloud and mobility solutions have been benefitting from greater revenue, higher margins and new customers.

According to a Microsoft commissioned IDC study across Asia Pacific, including Australia and New Zealand, the findings emphasise the importance for the vast IT ecosystem across the region to transform from traditional solution offerings to align with areas focused on Cloud and mobility.

Revealed to ARN and Reseller News during a press briefing on the ground at Microsoft Worldwide Partner Conference 2015 in Orlando, Florida, analyst firm IDC has projected growth opportunities for IT companies betting on cloud and mobility solutions and services throughout the region.

According to IDC, the public Cloud services market in Asia Pacific will double by 2018, growing from $US3.2 billion in 2014 to $US7.1 billion by 2018.

Mobility has been identified by IDC to be much larger in revenue potential than cloud in Asia Pacific, and is expected to grow by 46 per cent from $US20.3 billion in 2014 to $US29.1 billion in 2018.

Together, both Cloud and mobility command about $US36.2 billion in revenue potential for IT companies in Asia Pacific by 2018.

In the study, titled The Uptake of Cloud and Mobility in APAC Sets the Stage for Evolution of Partner Ecosystem, IDC interviewed more than 200 of Microsoft’s IT partners from nine markets in Asia Pacific, including Australia, Indonesia, Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand and Vietnam to understand their existing business models and growth strategies in facing these new market opportunities.

“The IT ecosystem has been core to our success for 40 years and will continue to be important to our ability to scale to the billions of users in Asia,” says Ananth Lazarus, Partner Lead, Microsoft Asia Pacific.

“Like all major technology shifts, there will be winners, losers and new leaders.

“The partner of the future has four key attributes for growth - they create scale, invest in differentiation, focus on value and win the hearts and minds of their customers.

“The ability of our partner ecosystem to be transformed into a profitable one is a top priority for us.”

For Lazarus, this is why Microsoft has invested $US225 million to transform its ecosystem in Asia Pacific through the right investments in training, incentives and business enablement.

“We are excited to see that many of our partners in this region are already transforming themselves alongside Microsoft to serve the needs of a different generation of customers in this region,” he adds.

The new norm?

Key findings from the whitepaper suggest that cloud is the new norm in Asia Pacific, stemmed from findings that cloud-oriented partners, with more than 50 per cent of their revenues from cloud offerings, make 1.8x more revenues and 1.4x more gross margin compared with non–cloud oriented partners.

According to Redmond, in unison with IDC, Cloud and mobility solutions are also more profitable for the local channel.

“Solutions partners can grow their gross margins by 20 per cent and value-added resellers can increase their margins by 100 per cent when they introduce Cloud value-added services,” the report states.

Meanwhile, partners who have a comprehensive Cloud delivery organisation make 20 per cent more profits, reports the study.

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