Gateway 2000?s claims that it will offer upgrades to Microsoft Office 97 for #20 has caused a storm of protest from UK firms, which maintain they cannot compete with the US direct seller on prices. John Shepheard, UK general manager of Gateway 2000, said last Tuesday that his company would undercut competitors, which will sell the reboxed software product for between #350 and #500. Shepheard said: ?We have an upgrade for Office 97. It costs #20 and retails at #500.? He denied that Gateway had a preferential deal with Microsoft. ?It?s a matter of volume,? he said. Rafi Razzak, managing director of system builder Centerprise, said: ?This is a result of the deal Gateway has struck in the US. There is no way any British company can compete with this.? A source at another large UK company said: ?The real question is what is Microsoft?s strategy on OEM deals for Office 97? ?We?re talking to Microsoft and asking them to clarify the situation. There?s a difference in price between the price on the Web site and the OEM price. I?m not sure how Gateway is managing to do this.? The volume deal, Shepheard admitted, meant that other direct global players such as Dell could offer similar deals. Companies including Compaq and IBM do not bundle software ? they prefer channel partners to sell software with their systems. Rob Barnes, who controls the buying of software for the Dixons chain, refused to comment on either Gateway?s or Microsoft?s pricing policy. No one from Microsoft UK was available for comment.
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