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Microsoft shuts out OEM disties from Office 2010

Microscope contributor

Microsoft will overhaul the way that Office 2010 is sold in a move that could lead to the rationalisation of its distributor channel.

The app will instead be available to retailers and resellers via joint OEM and volume license distributors Computer 2000, Ingram Micro, Westcoast and Bell Micro through the Full Packaged Product (FPP) agreement.

In a jargon-heavy letter sent to partners, Microsoft said Office 2007 Medialess License Kits (MLKs) will disappear and the software will be activated on new PCs by Product Key Cards (PKCs).

Rob Barrett, general manager of OEM operations for Microsoft Licensing, said in the note he wanted retailers and resellers to buy both Full Packaged Product and the Office 2010 PKCs "through the Microsoft FPP distribution agreement".

"As a result Office 2010 PKS will no longer be sold via an OEM agreement," he added. This means Northamber, Micro P, VIP and Enta Technologies will lose the range.

Microsoft said the decision will "simplify the selling process" and expand the sales potential for the volume license distributors. It also plans to price Office 2010 in local currency rather than dollars as had previously been the case.

According to several estimates, Office accounts for 10% to 30% of some OEM partners' sales.

Barrett told OEM distributors: "Microsoft realises there are a number of implications with this change, and we are working hard to ensure a smooth transition for your distribution business."

With a total of eight OEM distributors Microsoft had been expected to make some cuts following a review this summer but decided to maintain the status quo.

Removing Office 2010 from the portfolio of half the partners could well lead to them deciding to drop out of Microsoft's channel or scale down the business units handling the vendor's products.

Microsoft said it will share more information with partners before the end of October but urged them to make the most of the current suite.

"There are still many months ahead to maximise your revenue and profits with Office 2007. Microsoft is confident these changes will bring growth opportunities to sell more Office to more customers," added Barrett.

According to Duncan McAuley, purchasing director at VIP, UK staff at Microsoft were saying the decision from corporate HQ was not 100% certain but he had relayed its disappointment at the information pertained to the letter.

Jon Atherton, group commercial vice president at Enta Technologies, said he was still trying to understand the reasons behind Microsoft's decision, but added, "It's disappointing, Office has been a healthy and profitable part of our business."

The decision by Microsoft was brushed aside by Northamber group managing director Henry Matthews: "It wasn't a big line for us so there will be no big impact."

 


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