‘Everyone wants to get off of VMware and get into the cloud,’ Microsoft Chief Commercial Officer Judson Althoff says.

Microsoft’s new fiscal year has kicked off with hundreds of millions of dollars in partner incentives around security, Copilot and more – and one Microsoft executive took time to thank virtualization and desktop-as-a-service rival VMware for a boom Microsoft and its partners have seen in the cloud migration business.

During a virtual partner-focused Microsoft event called MCAPS Start for Partners – held in place of the annual Microsoft Inspire – Microsoft Executive Vice President and Chief Commercial Officer Judson Althoff (pictured) said that “VMware has given the world the greatest gift of all” in its price and other changes since its November acquisition by chipmaker Broadcom – changes met with plenty of criticism from partners.

“Everyone wants to get off of VMware and get into the cloud,” Althoff said during the event, named for the tech giant’s Microsoft Customer and Partner Solutions organization. Although cloud migrations “may seem a little less cool” than five other MCAPS priorities the EVP detailed during his talk, migrations are among the priorities “where all the money is.”

[RELATED: New Microsoft Partner Program Investments Include Millions For Security, Azure, Copilot]

Microsoft FY2025

“The migration opportunity is alive and well,” Althoff said. He also pointed partners to “a really, really specialized offer with AVS (Azure VMware Solution)” to take advantage of the VMware tumult and “get customers unlocked out of the VMware pricing challenges they’re having, and/or even bring their own licenses to the cloud.”

CRN has reached out to VMware for comment.

During MCAPS Start for Partners, Althoff detailed four pillars partners can keep in mind for selling customers on AI transformation projects:

• enrich employee experiences
• reinvent customer engagement
• reshape business processes
• bend the curve on innovation

Three partner growth strategies:

• Copilots on every device across every role
• AI design wins with every customer that bring together a stack of Microsoft AI products and services across multiple layers including the app and data layers
• Securing the cyber foundation of every customer

And two areas with large short-term revenue opportunities for partners – sales of core products and services within the Microsoft 365 umbrella and migrating customers to Microsoft products.

Althoff revealed new data around partner growth across the Microsoft portfolio:

• More than 23,000 partners sell Copilot
• Data & AI partner designations grew by 82 percent year over year
• Microsoft has 195,000 resellers of its “modern work” products and services
• Half of those resellers also sell security products and services
• Partners delivered more than 12,000 migrations and modernization projects

In a Thursday blog post, Microsoft detailed plans for more incentives and resources for partners, including:

• More than $150 million in pre-sales and post-sales investments for its Azure Innovate offering
• An incremental $90 million “to accelerate security growth” with partners
• A tenfold increase to its Copilot partner investment

Phil Walker, CEO of Manhattan Beach, Calif.-based Microsoft partner Network Solutions Provider, told CRN in an interview that he is doubling down on his AI expertise to deliver to his clients products and services to increase productivity and innovation.

“With tools like Microsoft 365 Copilot and Azure OpenAI Service, we’re positioned to help organizations harness the transformative power of AI across their operations,” he said.

During the MCAPS Start for Partners event, Microsoft CEO and Chairman Satya Nadella gave pre-recorded statements praising the vendor’s partners.

“Microsoft has always been a partner-led company. And we are counting on you to help our mutual customers adapt and thrive in this age of AI,” Nadella said. “It’s partners like yourselves that are ensuring the benefits of these technologies and platforms reach every country, industry, company and individual.”

Nadella continued: “Around the world, you’re helping make small businesses more productive, nonprofits more effective, multinationals more competitive, governments more efficient and improving health outcomes and educational outcomes everywhere. Thank you for embodying that excellence that makes this partner ecosystem so unique.”

Here’s more of what Althoff said in his own words during MCAPS Start for Partners.

The Copilot Partner Ecosystem

If you rewind back about a year ago today, the notion of a Copilot was really only a wish for us all. In fact, our Copilot products have only been GA (generally available) since November. Azure OpenAI has only been GA since November. Fabric has only been GA since November.

Yet 60 percent of the Fortune 500 use Copilot. Sixty-five percent of the Fortune 500 use Azure OpenAI. And that’s because we have a fantastic partner ecosystem lighting all of that up for our customers around the world. The progress we’ve made together has been awesome.

The things we’ve endured together have been amazing. And the delivery that we’ve had as an ecosystem has been nothing short of phenomenal.

And so on behalf of the entire Microsoft senior leadership team, I want to thank all of our partners. Because without you, it just simply would not have been possible.

The Customer AI Payoff

The two things I’m most proud of outside of any of the numbers are the fact that we have made Copilot stand for AI empowering human achievement. And we’ve done that as an ecosystem.

When people think about what AI can do for human beings, they think first about Copilots. And that’s something we’ve achieved together, and something we should be all very, very proud of.

The second thing I am just thrilled about is we have coined this term AI transformation. And the four pillars of AI transformation (enrich employee experiences, reinvent customer engagement, reshape business processes, bend the curve on innovation) … Customers come in with 100 big ideas of what they think they can get done with AI. Or if they’ve spent a lot of money with advisory services, they may have 400 big ideas of all of the things that they think they can get done.

So they need a framework for how to have AI really generate pragmatic business value. And these four pillars are really resonating with our customers. … Customers want to know how they can get a payoff for AI and all of the investments that we want to help them make to really move their businesses forward.

AI transformation will follow the same rules as digital transformation. It’ll be about business transformation, empowered by technology – in that order. … Let’s face it, every business process that we know of is some artifact of human workflow. If you think about what AI-first business processes can mean, it really helps us to think of a whole new way of getting work done in the modern era.

And of course, bending the curb on innovation. We do that in our world, generating software by using GitHub Copilot. But there are so many different industry applications – from manufacturing to financial services to healthcare – that we’re really going to unlock together across these four categories.

The AI Stack Approach

For us, there are three priorities for helping to unlock AI transformation. And the first is to put a Copilot on every device for every role and every organization. Unlock that human potential.

It’s really about AI empowering human potential through Copilots that Microsoft will take together and market with all of you, with all of our partners around the world, as well as new Copilots that we will build together by vertical to help unlock this potential with our customers.

We’re going to be talking a lot about AI design wins this fiscal year. … The bottom line is, there’s no AI transformation that can really happen at all without establishing a firm cybersecurity foundation. And there’s so much work that our partners do for us around the world to help make that happen with our customers. … As we’ve seen all of this evolve over the last year, modern AI applications are really depending on more of a stack. And this is what we call an AI design win here inside of Microsoft.

It’s about building an AI platform for a customer. Customers need that AI tool chain to unlock developer productivity, whether it’s GitHub Copilot, Visual Studio.

A tool chain to help unlock new AI innovation, including Copilot Studio so that citizen AI developers can also accelerate the promise of AI.

From there, it depends on relying on an AI platform. Model diversity – in fact, the best AI applications today are being built with more than one model. Large language models, foundational models but also small models that are very fit for purpose, that have a lower cost to deliver and serve.

So you’ll see a lot of model diversity moving forward on our platform. Of course, we love our partnership with Azure OpenAI and Mistral and Lama (by Facebook parent Meta) and many others. But you’ll see more and more innovation happening here at this tier.

And then we’re actually really looking forward to seeing what our partners will bring for model-as-a-service.

Then there’s the app platform, the core app services that light it up. And then of course, the data platform. One thing that AI can’t do is break the simple rule that no system can be any more intelligent than the data over which it reasons.

So critical for us all to go out and establish a data estate for our customers. Because if all our customers do is invest in AI without getting that data foundation right, all they’re going to do is make mistakes with greater confidence than ever before. So we have to bond together to build out that data stage.

You’re going to hear a lot more about this notion of an AI design win. We’re compensating our people on it. We have partner incentives so that we can all get together and establish these AI platforms for customers for the future of AI innovation to be unlocked.

Migrations, Migrations, Migrations

I spent a lot of time unpacking these with our sales force … but they’re also critical for … our partner ecosystem so that you understand how to monetize all of the efforts that we’re putting forward in the market. … Copilots on every device. AI design wins. Securing the cyber foundation for every customer. But also focusing on our core M365 (Microsoft 365) execution.

And when it comes to the cloud – just like real estate has location, location, location as the general rule – for cloud, it’s about migrations, migrations, migrations.

We’re going to have a lot of incentives around driving these migrations to market with our customers. And the best way to think about this is (the strategies of Copilots on every device across every role, AI design wins with every customer and securing every customer’s cyber foundation are) where all the growth is. And we’re going to drive a lot of growth together in market.

The second two (strategies of M365 core execution and migrations) is where all the revenue is. If you look at the amount of addressable market there is around our Microsoft 365 base and the unlock there is around migrations, it’s billions and billions and billions of dollars for us to go harvest together as a partner ecosystem.

But more important than that, it’s about the value unlock we can have for customers. Because it’s pretty hard to go from on-premises data centers to AI transformation all on one fell swoop.

We’ve got to continue that motion of migrating to the cloud, applying digital transformation principles and then unlocking the value of AI transformation.

Partner Opportunity Everywhere

In every single category, there is partner opportunity. There are over (23,000) partners selling Copilots today. We are going to unlock a new generation of growth with copilots.

And I passionately believe that just like today, you would never dream of hiring someone for any profession in any industry in any part of the world without giving them some form of a compute device.

Tomorrow, we’ll bring a chapter where no one hires anyone without giving them an AI assistant to unlock their personal potential.

And this is the world that we’re going to live in and unlock together. And there’s just a tremendous amount of opportunity for us to go and drive and market together.

These AI design wins. … The certifications, the designations you all carry as a part of our partner program have grown by over (82) percent year over year. And we’re just getting started in this world of AI design wins. So expect a lot more of that.

Nearly 200,000 modern workplace resellers. Fantastic. Fifty percent of you are also selling security. So we see a massive unlock around the cyber foundation and the modern work core.

Let me tell you, there are still hundreds of millions of seats out there for us to go unlock and move and migrate into this M365 suite. So there is a ton of growth opportunity out here for partners.

Microsoft Thanks VMware

When it comes to migrations, over 12,000 delivered. But let me tell you, there is something even more out there in front of us all because there are more Windows Server sockets to deploy.

There are more SQL Server sockets deployed. There are more Linux sockets to deploy.

And VMware has given the world the greatest gift of all in that everyone wants to get off of VMware and get into the cloud. And we have a really, really specialized offer with AVS (Azure VMware Solution) that our partners can go and deploy in the cloud, get customers unlocked out of the VMware pricing challenges they’re having, and/or even bring their own licenses to the cloud.

So the migration opportunity is alive and well. It may seem a little less cool, but let me tell youM365 core and migrations are) where all the money is and (Copilots on every device across every role, AI design wins and securing the cyber foundation of every customer) is where all the growth is. So across the portfolio, there is opportunity for partners.

These are the five things we’re going to go get done. … They’re the places where we’re going to ask you, our partner ecosystem, to invest whether you’re building software on our platform, whether you’re building practices as an SI (system integrator) to go take these services to market, or whether you’re one of our channel partners helping us grow out our scale businesses.

There is a tremendous amount of opportunity to work with Microsoft. There has never been a better time to be a Microsoft partner than right now.