MS direct scheme sidesteps channel
Software Online software shop plunges partners into uncertainty.
Microsoft has announced plans to sell its software direct over the internet in the US, bypassing the channel to pitch straight at consumers.
If the scheme, due to commence in August, proves successful, an online software store will also be set up in the UK.
In another possible blow to the channel, the vendor is charging a fee for every order it directs to its retail partners. It will require participating retailers to use MS SiteServer 3 - the latest version of its e-commerce package.
Retailers will also be obliged to provide Microsoft with marketing data from each online transaction.
US analysts have suggested that Microsoft could use this customer information if it chooses to expand its direct sales operation.
The Website, called New Interactive Technology for Reselling Online (Nitro) will also direct potential customers to Microsoft retail partners. It is seen as harmful by some retail and indirect channel partners, which have been vocal in the past about Microsoft pricing and licensing.
Dale Borland, head of Microsoft UK's consumer and retail division, said: 'With so much traffic going through the Website, we want to take advantage of those customers who might be in a buying mood. We remain totally committed to our UK channel.'
But while Borland claimed that no final decision had been made about the scheme in the UK, analysts and retail channel sources appeared resigned to the situation. Dataquest analyst Michael Longy said: 'This doesn't surprise me. People will experiment with different forms of commerce.
Whether they can do so without damaging the channel remains to be seen.'
The site, targeted at home users, is believed to be the first stage of an online facility for licensing volume orders to larger customers.
Peter Crane, managing director of Microsoft reseller PSM Micro, said: 'As it stands, this announcement does not bother me. But if Microsoft started encroaching on our patch, if it wanted to sell 50 user copies of Windows NT, there would be trouble.'
Michael Kraftman, technical director at retailer Tempo, said: 'It's inevitable that some of our business will be lost. But it is possible that it will widen the demand for the products we sell.'
Steve Bennett, MD of Software Warehouse, which already sells software online, said Microsoft had unsuccessfully attempted direct sales in the past, but reserved further comment until details of the present scheme had been confirmed.
See Tulip story, Page 3.