Ready for the rollout

All eyes are on Microsoft after the announcement of its extensive rollout plans for 2006. Ali Faramawy reveals how the software giant is gearing up for the campaign in the region

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By  Peter Branton Published  February 26, 2006

|~|Faramaway1body.jpg|~|There are clear design principles behind’s Microsoft’s reshuffle as part of its regional strategy, claims Faramawy. |~|While it is safe to say that industry colossus Microsoft just doesn’t do dull, last year was an eventful one even by the software giant’s standards. Any year in which your CEO is accused of violence against furniture is probably going to be a fraught one. It was also a busy year for Microsoft’s Middle East operations, with a regional reshuffle and various channel issues making the headlines. Don’t expect any slackening off in 2006. This year is going to see some massive product rollouts for the firm, topped by the expected launch of Windows Vista — the next-generation of the company’s flagship operating system. IT Weekly speaks to Ali Faramawy, the man in charge of Microsoft’s Middle East and Africa (MEA) operations, to get the inside track. 2005 was probably one of the most controversial years for Microsoft in quite a long time. There was a lot of criticism of the company, which is not anything new of course, but there was a clear sense that the company felt it was under a lot of pressure. I would cite the competition with Google, the Bill Gates and Ray Ozzie memos here. Do you think last year was a turning point for Microsoft? I’ve been around for eight years now; I did not necessarily think that last year was the toughest out of those eight years. I think people who have been in the company longer than I have would also say that. You take competition and you mention Google, but you look at where we come from and the competition we have faced, right from the beginning, if you look at IBM and OS/2, you look at Novell and WordPerfect, you look at Netscape, look at AOL. Every year, or every couple of years, there is that one thing that people are saying: this is the thing and Microsoft is in trouble and so on. Now that hype and discussion is Google. So facing tough competition is something that we’re used to, and facing tough competition is something that is incredibly healthy. When I look at the overall position the company is in right now, I feel very excited, I feel very enthused. We have a number of products coming out, that have just been released or are about to be released: a strong lineup on the server line, the developer line, Windows Vista, the Xbox and so on. I’m not saying that there are no challenges, but it is a regular day in the office for Microsoft. You say you’re about to launch some products, but Vista and Office 12 still look some way off. If they come out in November that is going to be a success for you at the current rate of progress, Microsoft execs are now talking about the holiday period, so you’re talking about November-December time now surely? I’m very confident that we will get them out before Christmas. We haven’t gone out with a formal launch date yet. I have some indications from what we have done internally, but I would have to wait before giving any indication. When are we likely to see Arabic versions of Vista and Office 12 then? Arabic is a tier one language, the Arabic enablement will be available out of the box. If people want to get the Arabic menus and Arabic help screens that will take a slightly longer time but it will be available one month or two after the first release. So the Arabic versions may not be available until 2007? I’ll still stick to 2006, Arabic is a tier one language. [But] if you look at the majority of products, then the majority of people use English version of the products with Arabic enablement. We were looking at usage in Arabic countries and we found that people preferred the English product, because for them it is an opportunity to improve and enhance their English. Moving away from product, can we talk about Microsoft’s regional strategy? You announced a reshuffle in August last year and said that you were going to strengthen resources in the region even further. What are we going to see from that in terms of resources? If you look at the Gulf, then reshuffle is probably a good word, I’ve heard worse! There are some clear design principles that we are trying to do. I think the first thing, the most important thing, is: what does our customer, and our partner, want to see in front of him? He wants to see a very capable Microsoft representative and he wants to see a very well-empowered Microsoft representative. So the person in front of him needs to be both these things. The rest are attempts from us to see, OK, what kinds of synergies can we have between the different countries, are there similarities in business models, in languages and so on and what is the most sensible geographical distribution that you can do, and so forth. That is mainly what led us to combine the Gulf operations together, add more and more people in customer and partner facing time, add more specialist resources. When we created the new structure we added more than 10%, added new roles and now with the recent budget review we are adding 20% more people. So what is your total headcount in the region? Let me try and give you the best and latest numbers. In the Gulf only, they have gone up from 114 to 145. And with that there are least another 60-70 people [on contracts and special assignments]. We’ve added more people to the regional support centres in the Gulf, we’ve added more people to the Microsoft Technology Centre in Dubai. Within the Gulf alone I think we are more than 200 people, excluding Saudi. In Saudi, we have about 80 people. Microsoft has done a lot of re-organisation — you say it made sense to combine — but of course you have repeatedly split the organisation in the past. Why have there been these various changes in policy? I don’t think that is very accurate, although it may seem like that. Let me give you a very quick idea: usually when you start up in a new region, you start from a central point and you start adding people from that central point. Then after that, you start having very very light representation in the different locations. Then you start growing those representations. As those countries start to become much more self-sufficent, you try to minimise central resources. But you have done a lot of restructures, shuffles whatever you call them in the past few years, I can cite various news stories that ITP has done on this. You have had more reorganisations than the likes of IBM, which did just one major one last year. Why the difference? I think ours has been more, I don’t doubt that. I think ours may have been more visible because we talk about them more, but all of them have been going in the same direction: to add more and more people to the field, give more and more empowerment to the field and reduce regional resources as much as you can. We will continue across this path, right now I’m doing the same thing in Africa. What about the frequent references to the grey product in the Middle East channel? There has been a lot going both ways to Europe and back, there have been auditing issues. What is happening here? What is happening is that as a company we are learning, in a very open world and a very transparent world, traders have the right to try and find products at the lowest price possible. At the same time as a company we try as much as we can to price the market. That has encouraged some people in different parts of the world to keep on looking at areas where we are more flexible in pricing to source products from that market. Of course, the last thing we want to do is lose that pricing flexibility. For instance there was a period when there was incredible currency fluctuations in Egypt. All of a sudden, it became clear that for the Egyptian consumer getting those prices up and up in Egyptian pounds was not the right thing to do. As a company we have to be sensitive to these things, freeze the prices for some time, take a hit on some of our revenues, because that is the right thing to do. But of course, other people are looking for opportunities in this, looking at moving that product around. Microsoft is heavily dependent on channel partners, yet here they are very unhappy about what has been going on. Channel relationships seem to have been very bad, what is Microsoft doing to address this problem? Can you be more specific? Yes I can. I can read you this from quote from Adnan Al-Falah at Tech Data: “Microsoft has no intimacy with its channel in this region and no real understanding. There is no real desire to help channel profitability.” “The distribution channel is bleeding and Microsoft is making us pay a bill for things that happened years ago. Microsoft is coming back and accusing the channel even though they acknowledge that they have got rid of the bad apples within Microsoft that were driving this sort of channel practice.” What would you say to that? This is a direct thing, or a direct implication of losing that pricing flexibility. So what happens is if you are offering that product at exactly the same price, you build your model based on a reseller lets say makes x percentage, but then if a number of resellers are selling exactly the same product, then the possibility of getting into a pricing war because of that is much more likely than anything else: one guy decides to discount and the other guy has no answer except to discount and so on. I acknowledge that in some parts of our business that pricing is an issue and that debate about margins and so on is an issue. That quote is from a distributor, distributors are very important to our channel. However, our channel partners are distributors, resellers, training centres, independent software vendors and so on. We try to work with them on four main areas: number one is around the management side, we invest in more people to work with them and understand them, learn how things are going with them and to have direct contact with them. Second thing is enablement and I would say that from the feedback I’m getting no other company invests as much in enablement and training of its partners as Microsoft. The company is really focused on true knowledge transfer, not only on the technical side but also on the sales side and the management side. We have programmes such as our partner academy, which has been started as a Middle East and Africa effort and is now being moved to other emerging markets such as Latin America and the Asia-Pacific region. The third part is the joint sales and marketing and again if you look at our events and you look at the impact on our channel partners, the fact that we go with our channel partners to all accounts it is very special. The fourth area is partner support, which is an embedded part in our partner programmes, we have invested in a developer support centre in Cairo, where we provide support to our partners. Our key to success is based on three things: our ability to raise the bar on the innovation side; our people, and how good they are and how happy they are; and our partners. If we get those three right we will continue to be the most successful company in the world. Finally can I ask about XP Starter Edition. Steve Ballmer, when he visited Dubai last year, said that you would look at Starter Edition for the region. What is happening with that now? We launched it in Egypt and in Turkey last month. In Egypt it is an extension to the home PC initiative. We’ve been working very hard to try and get a real low-cost PC into those markets. Its interesting because in Egypt and Turkey we found that people were going for the highest configuration, especially if the payments were around installments, but we still wanted to create one that would cater for a new level of users. We’re trying to learn from those, we’re trying to see how they will go so the Arab version is ready, they’re out in the market, we’re going to learn from those and maybe start doing this for other Arab countries as well. ||**||

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