I designed Microsoft's EA channel in 2001. It's being dismantled in 2026 | Hacker News Reader

I designed Microsoft's EA channel in 2001. It's being dismantled in 2026

brendanoconnor.net

29 pointsbrendo_y10 comments

Submitter here, with quick context. I was the sole designer of Microsoft's Enterprise Software Advisor (ESA) channel architecture between 1998 and 2001. The model converted Microsoft's enterprise licensing channel from a margin-based reseller structure to a direct-billing, advisory-fee structure. It launched as part of Licensing 6.0 in October 2001 and is still referenced by name in Microsoft's FY2025 10-K twenty-four years later.

The piece walks through what the original architecture was, why it worked (Microsoft's volume licensing commitments nearly tripled in the two years following launch, $1.9B to $5.5B), and why the 2026 unwind is structurally different. The 2001 transition gave partners a defined advisory role with a sustainable economic model. The 2026 transition does not.

Happy to take questions on the architecture, the design decisions, the pieces that worked and the pieces I'd do differently, or how this maps to adjacent industries. Insurance brokerage M&A is currently following a parallel consolidation pattern, which is interesting because insurance was one of the two industries I studied when designing the ESA model in 1998.

If any specific claim needs sourcing, flag it and I'll respond with primary-source citations.

Brendan

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Microsoft's volume licensing, from the perspective of sysadmins and other folks trying to actually obtain software for use, is known to be some cross product of "byzantine" and "kafkaesque".

I fail to see how this is a win for the vast majority of folks impacted by the licensing process...

Wish this wasn't written by Opus.

The difference in the writing is structural. It sounded too elegant. The same outcomes produce different paragraphs because the words are attached to different incentives. LLM voice is a leading indicator that the work is inconsequential.

Reading further gave me the verified picture I needed. The mechanics held up. Most content creators won't last long enough to be both supported by their sponsors and reblogged by adopters. Claude's response to OP will be direct: hold the line.

Why does VAMT suck so much? We normally use ADBA and that works fine, but we've had to use VAMT to activate Win10 ESU licenses last year, and it was an absolute nightmare. Possibly the most poorly designed piece of Microsoft tool in my experience (maybe second only to MS cloud services).

- There was no option to activate a specific set of machines sitting in a particular OU or AD group, which means you'd have to manually import machines that you want to activate - and you can't do a bulk import from a simple text/CSV file either.

- VAMT does not automatically retry failed devices, or devices which were offline. Trying to find these devices and manually activate them via VAMT is also not feasible, especially if you have a large fleet.

- Pretty much no useful reporting capability especially if you want to track failed/offline devices.

I've had to end up hacking together a bunch of PowerShell scripts and scheduled tasks to make up for the lack of functionality - something I shouldn't have to do. And it wasn't nice that the VAMT module isn't compatible with PowerShell v5.1, which means I needed to run my scripts under PowerShell v2...

And please don't tell me that the answer is "cloud". Cloud doesn't work for everyone, and I'm sure MS have plenty of Fortune 500 customers or critical organisations (like government agencies) that are still on-prem only.

The transition is rough. I still advise clients to sign up for Microsoft 365, but I basically have to charge them by the hour to do so.

It might have worked for Microsoft partners, but it was terrible for customers. Hoping the reservation model will be better.

While this is advertising blog post with some possible interesting backstory, you have severely misjudged the main audience of this site which is a bunch of nerds.

Can we get TL;Don't Have MBA summary?

I think there are some who would probably argue the opposite about the users of news.ycombinator.com . It's an explanation for the $ in M$.

Not an MBA but have dealt with licensing throughout my career, so I’ll try taking a whack at it:

Under the prior Enterprise Agreement structure, Microsoft would basically sell licenses to channel partners at decreasing costs based on KPIs like volume. This works for physical goods where big vendors get bigger discounts for bigger volume commitments, but leaves a lot of money on the table for software vendors while making it difficult for channel partners to compete with established players (who in turn can bully software makers into more lucrative terms).

So Microsoft - or the author, rather - moved to the Software Assurance model: everyone fits into the same tiers depending on size, and everyone gets the same margins. This changes incentives to reward bundling, multi-year deals, and broader portfolios of software instead of just straight volume. Putting everyone on equal footing for comp also incentivizes services - MSPs, consulting, architecture, etc - which then also feeds into the original incentives of growing multi-year deals and broader portfolio adoption, hence the “Perpetual Motion Machine” comment attributed to Ballmer.

Except Microsoft now feels they’re such the dominant player in the market that they can handle billing outright, relegating partners solely to advisors and consultants in an era where Microsoft sells the very services partners used to make bank on. This is cutting out the middleman (channel partners), but also exposed Microsoft to a litany of government regulation as a result. This is because the SA model concentrates pricing in Microsoft’s hands, and thus gives them outsized power and influence in the market.

That’s my understanding as an outsider though; I fully admit I am likely wrong on some points that OP might be able to clarify or correct.

> Except Microsoft now feels they’re such the dominant player in the market that they can handle billing outright, relegating partners solely to advisors and consultants in an era where Microsoft sells the very services partners used to make bank on. This is cutting out the middleman (channel partners), but also exposed Microsoft to a litany of government regulation as a result. This is because the SA model concentrates pricing in Microsoft’s hands, and thus gives them outsized power and influence in the market.

This seems incompatible with the description in the article:

>> The model split the EA channel into three tiers covering 75,000+ addressable accounts and an $11.5B opportunity envelope: 1,150 Microsoft-led global strategic accounts at a 4% ESA fee, 14,000 channel-assisted corporate accounts at 9%, and 60,000 channel-led medium enterprise accounts at 15%. Microsoft billed the customer directly across all three tiers. What changed was who led the sale, what role the partner played, and how the partner got paid. The channel was converting from a margin model, where partners set end price through discounts, to an advisory fee model, where Microsoft set price and partners earned fees for services delivered. An ESA was required on every deal.

Emphasis mine in both cases.

That said, I can't really be sure what's going on, because the author hasn't bothered to explain any of it. There is clearly some set of material that he assumes I know, but he hasn't even stated what that is.

Why am I supposed to watch the text fade in from nothing as I scroll down the page?

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