As Microsoft still deliberates over which broadliner to cut from its distribution stable, other distributors have raised concerns about a potential margin-squeezing price war.
The software giant recently added Westcoast, Computers Unlimited, VIP, Blue Solutions, Northamber and Micro Peripherals to its UK Authorised distributor list, bringing its UK total to 12 (CRN, 30 October). At the same time, the software giant also revealed that one of its three broadliners – Ingram Micro, Bell Microproducts or Computer 2000 – would be cut within six months.
Karin Jones, sales and marketing director at VIP, told CRN: “Some Microsoft distributors may go for lower margins than others. It is a level playing field and the easiest way to change this is to lower prices. However, we are confident we have a good customer base in place.”
Jones added that VIP, which now covers Microsoft’s OEM software business, works with a number of PC assemblers that can now use VIP as a one-stop shop for components and software.
Darren Stokes, director at Blue Solutions, said: “I think a price war is inevitable to some degree. Particularly with three broadliners fighting it out because they will need to do anything to get the business, and that includes competing on price.
“However, once the dust has settled, people will see it is impossible to sell Microsoft at one or two per cent margin because no-one will be making any money.
Richard Love, director of marketing at Computers Unlimited, said: “When you have lots of different firms in the same area there is a threat of a price war, so I would not rule it out.
“However, the broadliners are likely to cause it, rather than the specialist distributors that have been added.”
Microsoft was unavailable for comment.
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