UK channel await software giant's investigation into Israeli "irregularities"
Channel players have called for Microsoft to examine its worldwide pricing structure, following the vendor's confirmation to CRN that it is investigating "irregularities" in its Middle Eastern channel sales strategy which has had a knock-on effect on the UK.
The investigation follows the discovery that licence sales in the Middle East were higher than expected in the fourth quarter of 2004.
It has long been suspected that some Middle Eastern distributors have been selling software licences to overseas customers, particularly in Europe.
Microsoft is embroiled in a battle with UK distributor ITAC, having issued a $7m civil case alleging the distributor has been selling "parallel import" software from an unauthorised distributor in the Middle East (CRN, 24 January). ITAC has countersued for libel. The case continues.
A Microsoft representative told CRN: "Several irregularities with respect to some internal company work procedures were discovered last year. MS Israel has informed the management of the company in Europe and has taken appropriate actions."
Ross Miller, managing director of LAR Trustmarque Solutions, said Microsoft is right to investigate. "It should make every effort to control its global channel and stop any ungentlemanly behaviour," he said.
Andy Buss, senior analyst at Canalys, agreed. "This kind of activity undercuts the legitimate channel and puts the person buying the licence at risk. In most cases licences are restricted, especially outside the European Union. It could render the licence invalid because it is a breach of terms and conditions," he said.
He added that the vendor needs education and more licensing transparency to combat the problem.
But one channel source said part of the problem is Microsoft's pricing structure. "If pricing is cheaper in some countries than others, then that could be detrimental to the rest of the market," he said.
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