CHS Electronics has failed in its bid to be reinstated as an official Microsoft delivery service provider (DSP).
As revealed in PC Dealer (1 April), CHS lost its DSP status this time last year, following its acquisition of broadline distributor Merisel.
Since then, it has been locked in an ongoing debate with MS over the vendor's policy of controlling the supply of OEM goods.
CHS decided to apply for reinstatement as an official OEM supplier when the vendor used legal pressure to prevent it from importing software from its parent company in Europe.
Des O'Carroll, Microsoft OEM distribution manager, said: 'We will not be changing our DSP partners at this stage. We believe our present distributors can focus on this particular market better than any of the alternative applicants.'
Computer 2000's application for DSP status was also turned down. The decision was greeted with relief by the rest of the Microsoft channel.
DSPs and broadline suppliers both expressed concern that a dual-status distributor would gain an unfair advantage in the traditionally divided market.
Industry sources had also suggested that additional DSPs could exacerbate the problem of software piracy, making it more likely for OEM products to find their way into the illegal channel.
Prior to the decision, Peter Rigby, marketing director of CHS, had been confident the application would be successful. On hearing Microsoft's decision to retain its present partners, he expressed disappointment but said it would not prevent CHS from dealing in OEM products.
He added that CHS was 'not as yet' planning to return to its European partner as a source of competitively priced OEM software. 'We have the benefit of four or five suppliers competing against each other in the UK and will continue, for the moment, to take advantage of this situation,' said Rigby.
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