MS Lars face tough fight for soft dollars

Software giant imposes strict penalty on marketing funds for large account resellers that fail to settle their bills promptly

Microsoft is taking a tough stance on its co-operative marketing funds, refusing to honour previous agreements if large account resellers (Lars) fail to pay their bills on time.

Under the old contracts, one per cent of the total marketing funds was dependent on resellers? punctuality and accuracy in paying bills. Resellers can earn a total of four per cent. But from 1 July, if resellers fail to pay their bills on time or accurately every month, they will lose the full four per cent.

There was also a suggestion that Lars risk losing the fund if they fail to make 70 per cent of sales targets in any one of four product mix criteria: Office 97 migration sales, Back Office, 32bit, and breadth sales and new markets.

As part of the changes it was confirmed that Bull had lost its status as a Lar, although both companies claimed that it was negotiating to find a way of fulfilling existing contracts. Further changes included Microsoft dropping the threshold level from #1 million to #200,000 a year to become an educational Lar.

One Lar said: ?Although it?s perfectly sensible in theory, in practice it gives Microsoft an unhealthy amount of power. It can stop you getting marketing funds just like that.?

Robert Royce, director of sales at Management Software, said: ? It would be nice if resellers could be compensated for their strengths in certain markets, so, if your Back Office sales figures are weak but Office 97 is strong, you don?t lose out.?

Shaun Frohlich, chairman at Bytes Computer Supplies, said: ?Some people will lose out, but that?s fair enough. If you?re not pulling your weight there?s no reason you should be in the club.?

Jonathan Downes, business development manager for Microsoft?s Select programme, denied it was an attempt to cull its less-productive Lars.