Microsoft has hit back at claims that it is leaving its distribution partners out in the cold by taking software sales direct to large high-street retailers.
Last month, it was revealed that Microsoft planned to launch a direct sales strategy with larger retailers including Dixons Group, Staples, Tempo and Electronics Boutique.
Stephen Uden, head of partner marketing at Microsoft, explained the move is aimed at larger retailers which do not make enough margin from the distribution channel. "We have only gone for the top half-dozen retailers," he said.
The main reason is to shorten the supply chain and give retailers more scope for in-store promotions. "There is always room for additions, and Microsoft will be keeping the situation under review," said Uden.
"Many of the larger retailers already have their own logistics operations and don't make much margin from old-style distribution. But distributors are still very much part of our retail model," he added.
According to Uden, distributors can add more value for smaller retailers and resellers than for larger ones. "The complex inventory system that distributors can provide is essential for smaller retailers and resellers," he argued.
The scheme has attracted criticism, with some distributors angry at being excluded and others questioning the business logic of it. "The cost of storage and delivery would be huge," CRN was told by an industry source.
One company that will be affected by the decision is Gem Distribution. Dean Van-Velson, head of marketing, explained that the company has been preparing for this announcement for some time. "We have been aware of this for a while," he said.
Van-Velson said that Gem has adjusted its business to compensate. "We have been expanding the licensing side of our distribution with Microsoft to compensate for the downturn in the consumer product side."
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