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Microsoft Offers ISVs New Royalty Program

Independent software vendors (ISVs) are the lifeblood of the world's largest software company, and Microsoft is making sure it stays that way with a number of new initiatives, including a 50 percent cut on royalty rates on embedded programs.

During a kickoff event at its Partnerworld Conference, taking place in Toronto this week, Microsoft unveiled seven new enhancements to its ISV Partner program. They include: more data-sharing on error reports with third-party software vendors; financial incentives for embedding server product lines in their own products; and a "buddy system" for helping ISVs navigate the company's different divisions.

Sanjay Parthasarathy, vice president of Developer & Platform Evangelism, said the additions should strengthen and grow the ISV ecosystem. The program was built for ISVs from the ground up and is designed to bring more flexibility into their integrated applications.

Adam Sohn, product manager, Developer & Platform Evangelism, said among the new features is a new community site called MSDN for ISVs, which focuses on architecture design and development among other issues. He called the new section a logical extension of its MSDN site and network to provide full life cycle development support, as well as support for vertical application development.

"It's targeted at the challenges that ISVs are facing," Sohn told internetnews.com. While the MSDN network has long contained content to help ISVs work with Microsoft platforms, the section for ISVs needed updating, he added.

It now offers a mix of information targeting age-old problems facing software developers, such as how to drive value for customers, as well as create opportunities for new clients. It also contains some new information, for example, how to deliver more effective Web services design.

A key new feature, however, is Microsoft's ISV Royalty program. Officials said the changes are designed as a single integrated way for ISVs to embed Microsoft's product technology into their own product lines. The idea is to make embedding Microsoft code on key products, such as SQL Server -- one of the most popular used by ISVs, easier by easing royalty rates that it historically charged ISVs.

Sohn said the new features of the royalty program mean that in some cases, royalty rates on embedded products are halved. Before, where ISVs had to perhaps commit to $20,000 in royalty revenue, they now would only have to commit to $10,000 over two years, he said.

"Number two, we've just expanded the products that are available to the ISVs. This means that, if an ISV wants to sell its own product, which is bundled with one of Microsoft server products for example, the process of lining up licensing and royalty rates has been eased and extended for the ISVs," Sohn said.

This move simplifies the process while expanding the list of products they would have access to under the program, Sohn said. Those include all of Microsoft's major server products, such as Windows Server and Small Business Server, SQL Server as well as its MOM and Biz Talk server features.

Another new feature in the partner program expansion is the ISV buddy program. Sohn said the program links an ISV with a Microsoft developer, in order to help smaller ISVs navigate their way through the company, and find the right contacts. Within a week of launching the program, 420 companies have signed up, as well as over 800 employees, he said. This includes line level managers to more senior level executives.

"They want to empower these guys to be more successful," Sohn said. Every MS developer is asked to adopt an ISV to offer guidance, personal touch and to make sure they know how and which channels are right for their particular needs in building applications on Microsoft platforms.

Other additions include ISV Community days, in which the company will launch quarterly meetings with developers around the globe -- 300 events are scheduled so far. Sohn said they will culminate in ISV Shows, which officials called a series of broadcasts that highlight key technology directions and opportunities for ISVs. In addition, it is designed to provide visibility into Microsoft's target scenarios and approach to innovation.

In what might be called a new way of sharing code, Microsoft has also expanded its error-reporting tool, so that ISV partners will have access to the same error reporting data that XP users send to Microsoft after a program crashes. ISV partners that register their applications in the company's marketplace will be able to receive error reporting information directly from the third-party service that sends the error report, Microsoft said. This way, when an application crashes on a Windows machine connected to the Internet, the participating ISV will receive on a monthly basis, a set of information to help trouble-shoot the problem, whether its with software, hardware or with driver configurations, for example.

Sohn said with 99 percent of the company's revenues driven in part by the ISVs, the theme of the Partnerworld program this year is "velocity."