Uneasy sell for Dell

You can imagine what the honchos down in Round Rock, Texas, may have been thinking: How hard can it be to sell computers to small-business people? Theyre desperate for efficient technology solutions to give them a competitive edge. Weve got the resources—lets scoop them up!

So, on July 11, Dell bought up some billboards in Times Square to announce the advent of Vostro, its new line of products and services for companies of 25 employees and fewer. It also rounded up a few hundred small-business owners for a meet-and-greet with CEO Michael Dell on the 30th floor of the Reuters building. Outside, the hot, hazy, humid air wrapped itself like gauze across the windows, obscuring whatever view of the Empire State Building there may have been.

But if the folks organizing the meeting thought that a handpicked group was going to be awed by the presence of the great Dell leader himself, then their vision wasnt much better than the view out the window.

The company billed the event as a town hall meeting, and those in attendance took it to mean just that. Dell gave a short but laudatory speech about Vostro, hitting the highlights like a politico making a well-worn stump speech: "Vostro means yours in Spanish, and that means its geared toward your needs: It comes with a dedicated support staff; the time needed to set up a new system is cut in half; it comes with 10 gigs of online storage free for one year; it includes a self-explanatory PC tune-up and maintenance tool; it does away with trialware [software that comes preloaded on Dell PCs]."

Michael Dell then opened the floor to questions, and the people in attendance proceeded to grill him as if he were their state assemblyman or, worse, a candidate stumping for votes in Iowa. "How do we know youre really going to improve service?" "Im fed up with waiting on hold for 2 hours." "How come my rep didnt tell me you offer a three-year service agreement?" "What do I do with all the obsolete equipment I have stuck in my closets?" "How come I cant get my computer to boot up?"

Indeed, it turns out theres more to winning over a group of small-­business owners than promising them that youll be on their side. One customer—a tall, middle-aged man with thick shoulders and a booming voice—said hed been a Dell customer in the past, switched to Hewlett-Packard and was now ready to switch back to Dell. But he warned Dell that if things didnt turn out as expected, "Im going to personally come and get you."

The man laughed, but he didnt look like he was kidding, and the audience seemed to reflect his mood—truculence with a little bit of hope thrown in. The message was clear: This is your last shot to get my business, buddy.—Michael Hickins

Support hosed

Independence Day, or the eve of, marked another milestone in the still-nascent lawsuit filed by Oracle against SAP and its subsidiary TomorrowNow. While the initial charge, one that alleged grand larceny on a corporate scale, seemed spurious at best, SAP CEO Henning Kagermanns hat-in-hand admission July 3 that some Tomorrow­Now employees did unlawfully poach some Oracle support documentation lent credence to the claim.

The back-and-forth legal wrangling between SAP and Oracle notwithstanding, there is an underlying issue that both Oracle and SAP will work diligently to obfuscate: the fact that their combined 70,000-or-so applications customers can get a better deal elsewhere with at least equivalent functionality support.

The Virginia Farm Bureau, a 150,000-­member organization made up of rural farmers and their families, found out almost by accident. A few years ago, with the aim of consolidating some bills, Tony Spears, the manager of financial systems at the Virginia Farm Bureau, came across two separate invoices for the same license from Oracle. After a few conversations with his rep, Spears was able to figure out what he had in hand: a rare breakdown of product support and license fees.

"What Oracle doesnt really tell you is a breakdown of how much is license fee and how much is support fee. They lump it all together," said Spears, in Richmond, Va. "We broke out the support fee and continue to pay the license fee."

With the insight from the dual invoices tucked in the back of his head, Spears later took a step that relatively few companies have: He contracted with a third-party vendor to provide support for the Virginia Farm Bureaus PeopleSoft applications.

Spears had worked on PeopleSoft accounts in the past, and he was familiar with Seth Ravin—he even followed his career to some degree. So when Ravin formed Rimini Street, a company that provides third-party support for Oracles PeopleSoft, JD Edwards and Siebel applications, Spears interest was piqued.

Spears said that even before Oracles suit against PeopleSoft, he was aware of, and concerned about, the potential consequences of providing Rimini Street access to the PeopleSoft support site. Third-party consultants gain access to customers applications, or, in this case, support documentation, by an age-old practice: The customer hands over his or her log-in and password information with the tacit agreement that everyone will act like professionals and not go beyond license parameters.

"I created an account for [Rimini Street] and I leave it up to them," said Spears. "I have everything theyve downloaded. I have a copy of it. There isnt any way for me to check that anyway. I am assuming we are all working on a professional basis."

Any supposed question of ethics aside, Spears said he is, quite happily, saving more than 50 percent on his Oracle support fee.—Renee Boucher Ferguson

Microsofts partnership

Microsoft used its recent Worldwide Partner Conference to announce its "software plus services" strategy. Do I mean software as a service, you ask? No, CEO Steve Ballmer and other Microsoft executives say they do not believe the term "SAAS" correctly defines Microsofts strategy, which is to provide on-premises offerings, offerings hosted by Microsoft and a set of offerings hosted by partners. This, Ballmer and the other executives say, will give customers the power of choice and significantly expand the ecosystem of offerings and opportunities for partners.

There certainly seemed to be very little unhappiness about the move when Ballmer took to the stage for his conference keynote. He was the last executive to speak—rather than first, as is his custom—so the services news was pretty much out by the time he rushed onto the stage to loud applause and cheers. Letting out the all-too-familiar Ballmer whoop, he ran into the audience to the tune of "Lets Get It Started" and shook hands up and down the aisle. Ballmers message was that Microsoft is building new business capabilities and that the companys partners need to build new capabilities along with it.

So, can Microsoft get it started? There was a lot of skepticism among partners about how quickly Microsoft will be able to implement this strategy and how successful the strategy will ultimately be in this space.

One person who should know is Keith McCall, a former Exchange Server executive and now chief technology officer at Azaleos, a company that offers a managed Exchange appliance with remote maintenance and proactive monitoring.

Having spent years inside Redmond before moving into the hosted appliance business, McCall knows what the challenges are, pointing out that in more than three years of operating a huge support infrastructure, Microsoft has managed to add just 10,000 mailboxes to its off-premises hosted offering.

"There are an estimated 140 million seats of Exchange deployed worldwide today, which leaves a huge amount of room for both Microsoft and its partners to address the business criticality of Microsoft Exchange by delivering both managed on-premises, and hosted off-premises, offerings," McCall said.

When asked what he thought about Microsofts plans to host more of its own applications and content, given its core competency of developing software, Mark Welch, who works for a Microsoft Gold certified partner, summed it up by saying: "I wasnt aware that Microsoft was in the real estate business."—Peter Galli