VIP Computers has said that it is disappointed but not surprised to be cut out of Microsoft's distribution roster, and claimed the move could end a price war for successful disties.
Yesterday, Microsoft told its distribution partners which ones it has chosen to move forward with, after contenders completed a request for proposal (RFP) process last month. The vendor said the changes were part of its drive to become a devices and services company.
Ingram Micro, Tech Data, Micro-P, Enta Technologies and Westcoast were all awarded places on various product line-ups, but VIP Computers lost out on its place as a Commercial OEM (COEM) Windows and Server distributor. Enta Technologies, Ingram and Tech Data will take their place on the line-up once the changes come into place in January, meaning VIP, Westcoast and Micro-P missed out – although the latter two were awarded COEM rights on servers only.
VIP, which has worked with Microsoft on COEM products for the past seven years, said it was disappointed to hear the news, but it was not unexpected as commoditisation of the vendor's products in this area had led to a price war among disties which Microsoft needed to address.
VIP's purchasing director Duncan McAuley told CRN: "We believe Microsoft's change in strategy over the past couple of years has caused the COEM business to become commoditised, with price being the major determinant of sales in the UK. Also with Microsoft facing significant challenges within the PC business, including threats from Apple and Google, they have been forced to take difficult decisions."
He added that Microsoft's move to cut the number of COEM disties in half, from six to three, could help combat the commoditisation.
"There will be a slight increase in margin; the challenge will be that business, in terms of Windows, is shrinking," he said. "The margin may go up but there is a smaller pie to go around."
McAuley added that he was disappointed that Microsoft decided not to continue working with the Warrington-based firm on COEM products, but stressed that the company is well placed, having made pre-emptive moves to realign its priorities.
"It won't have a huge impact on us, to be honest," he said. "VIP has been anticipating a change in the distribution line-up in order to streamline the Microsoft business and, as a result, we have also moved our focus in a different direction.
"However, VIP Group retains a strong relationship with Microsoft through the direct partnership with CMS Computers."
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