It sounds like a knighthood: “Germany has become a global leader in the adoption of artificial intelligence.” That’s how OpenAI CEO Sam Altman justifies his decision to open an office in Munich, establish a dedicated sales team, and deploy his “Forward Deployed Engineering” task force to advance AI projects in German companies. He even plans to visit Munich more frequently. Of course, this might also have something to do with the fact that Munich is home to Microsoft’s German headquarters—OpenAI’s most important business partner, which has already invested around $13 billion in the AI startup. Not to mention the Technical University of Munich, which produces top-tier AI talent year after year.
Still, it’s music to the ears of a German business community plagued by self-doubt when OpenAI’s Chief Revenue Officer, Giancarlo Lionetti, tells Handelsblatt: “Germany is a key growth market.” OpenAI is focusing on industries ranging from manufacturing and pharmaceuticals to financial services and healthcare. However, there’s a bitter aftertaste: after opening offices in London, Dublin, Brussels, Paris, and Zurich, Germany was only the sixth location on OpenAI’s list.
But the race for AI dominance isn’t being decided by large-scale projects with global corporations. Instead, the real battle is taking place in the intricate world of small and medium-sized enterprises (SMEs). In Germany alone, more than three million SMEs are on the brink of investing in AI. Across Europe, that number is ten times higher, and globally, we’re talking about hundreds of millions of potential SME customers. Yet, anyone who truly wants to understand the SME market must study the German Mittelstand. Nowhere else in the world is the economic and social relevance of SMEs and family-owned businesses as pronounced as it is in Germany.
And nowhere else is industry-specific differentiation so meticulously refined. A one-size-fits-all solution may work for American SMEs, but in Germany, every business owner insists on tailored solutions for their specific industry and needs.
Microsoft Understood This Before OpenAI Did
Microsoft grasped this long before OpenAI. The tech giant has built a dense network of sales and development partners across Europe to serve SMEs effectively. In Germany alone, Microsoft works with around 30,000 partners—which translates to an average of 100 SME customers per partner. Such a tightly woven partner network is rare in any other economy.
And because Microsoft understands that SMEs can only be reached through a strong partner channel, Redmond recently made a strategic decision: to reunite its SME business and partner management under a single organizational structure. That was the right move. But an even better decision was to entrust leadership of this new organization to a German—Ralph Haupter, the former EMEA head, who knows the Mittelstand like few others do.
Microsoft’s German DNA and OpenAI’s Learning Curve
One could argue that with Haupter’s appointment as head of the new SME&C organization, Microsoft has become a little more German. More importantly, the company is returning to a strong, Mittelstand-focused strategy that had previously been so successful.
During Microsoft’s last wave of corporate centralization last summer, the direct communication lines to SME customers were carelessly severed. Instead, marketing and product messaging were dictated exclusively from Redmond’s top management. But you can’t sell AI-powered solutions to a French winemaker or a German organic farmer using examples from America’s Midwest, where self-driving tractors harvest crops on fields larger than some entire Italian municipalities.
SMEs—and their unique regional and industry-specific needs—must be addressed individually. That requires a dense, well-trained partner network. It’s equally crucial that small and mid-sized software and system integrators rapidly expand their AI expertise.
While project-oriented task forces can be valuable, they cannot replace direct connections with millions of SME customers. Sam Altman will need to learn this if he wants to compete with Microsoft in this space. Of course, he could speed up the process by strengthening his partnership with Microsoft and leveraging its established partner network.
Meanwhile, OpenAI’s competitor Anthropic (Amazon’s AI partner) is already joking that OpenAI might as well focus on non-paying consumer users, while Anthropic itself takes over the lucrative business segment.
The Future of AI Belongs to SMEs
The real AI market battle has begun—not in corporate boardrooms but in the global SME sector. As Microsoft refines its strategy, SMEs and their tech partners stand to gain the most from this renewed focus.
I wholeheartedly wish Ralph Haupter success in leading this challenging yet essential mission.