Microsoft Recruits Dell, HP to Expand Enterprise Surface Area

Microsoft on Tuesday launched the Surface Enterprise Initiative, a partnership program designed to encourage adoption of Windows 10 in the enterprise. This follows a strong first month of general availability, with 75 million devices already running the new operating system.

First in line to participate in the Surface Enterprise Initiative were Dell and HP. Both companies have agreed to sell Microsoft’s Surface Pro 3 tablet and accessories in their respective online stores.

Dell will begin selling the tablet device and related accessories to enterprise customers in October, and it will further offer support, warranty, configuration and deployment options.

HP, currently the world’s No. 1 commercial PC maker, will sell and support the Surface Pro 3, while continuing to offer its own line of detachable products, including the HP Elite X2 1011, HP Pro X2 210, HP Pro X2 612 and HP Pavilion X2.

These are the first in a series of partnerships to provide solutions, sales, services and support to enterprise customers through the combination of Windows 10 devices and industry-specific apps. Microsoft plans to leverage its relationships with Accenture and Avanade as well.

Microsoft will roll out new Windows 10 enterprise capabilities to Windows Insiders this month.

Microsoft Overreach?

Microsoft now appears to be playing every card in its hand to establish Windows 10 as the de facto operating system for enterprise devices.

“Microsoft is very determined to succeed here, and this explains a lot of what is going on,” said Roger Entner, principal analyst at Recon Analytics.

However, these efforts could have some unintended consequences. Some Microsoft Surface Pro device resellers have expressed outrage over the Surface Enterprise Initiative, claiming that the company has jeopardized its loyal channel partners by bringing in Dell and HP as direct competitors.

“Channel conflicts like this generally do a lot more harm than any initiative can do good,” Entner told the E-Commerce Times.

Channel Overreaction?

Microsoft may have timed its announcement to take some attention away Apple, which held its fall event on Wednesday. Apple announced a new, larger iPad — complete with detachable keyboard and stylus — designed to appeal to the enterprise crowd.

It also could be a way for Microsoft to repair its relationships with Dell and HP, as well as other PC makers, by allowing them to profit directly from Surface sales. Those relationships were somewhat strained when Microsoft introduced the first Surface device in October 2012, setting it up as a direct competitor against their enterprise tablet products.

Mending those bridges may have angered the other channel partners, but the damage to them may be far less significant.

“Not sure I see why the channel partners are livid,” said Roger Kay, principal analyst at Endpoint Technologies Associates.

“Dell provides services for some of its customers and has for a long time,” he told the E-Commerce Times.

Pros and Cons

Microsoft could be the real winner with this deal.

There are “clear benefits for Microsoft and its Surface products,” said Craig Stice, senior principal analyst for compute and server electronics at IHS.

“By partnering with Dell and HP, Microsoft vastly expands its reach into the enterprise segment, capitalizing on HP and Dell’s huge network of contacts and the might of their respective sales forces,” he told the E-Commerce Times.

However, for HP and Dell the picture is a little more mixed, Stice added, and it may be difficult to highlight the benefits of a competitor’s product without unintentionally spotlighting the deficiencies of one’s own products.

“Unlike IBM in its partnership with Apple on the iPad, Dell and HP are active competitors in the tablet space,” he noted. “While Microsoft, with its Surface products, is currently the Windows leader in this space and this move allows Dell and HP to offer that product as an alternative to their own, there is a risk.” [*Editor’s Note – Sept. 10, 2015]

Source of the Problem

Given that many channel partners do carry products from various partners, it isn’t clear how the Microsoft initiative differs from other product-sourcing deals. The problem could be that some potential partners were left out of it.

Beyond any lingering sour grapes, the initiative could highlight the potential opportunity the enterprise market offers to PC makers and vendors.

“The move is illustrative of tablet suppliers in general going after the corporate market, which was, after all, where tablet sales began, way before Apple introduced the iPad,” Kay noted.

“Things are getting more competitive in that market, whose growth overall has slowed, and the Wintel camp needs something to compete against Apple and the Google ecosystem,” he added. “Corporate folks like Wintel, and so that market should be ready to accept Surface on a larger scale.”

*ECT News Network editor’s note – Sept. 10, 2015: Our original published version of this story omitted the “Pros and Cons” section.