Microsoft resellers face software price hike

Smaller Microsoft resellers will face higher software prices following the vendor's decision to scrap cash rebates to its distribution partners. It claimed the move will pass on cost savings to small to medium sized enterprise resellers.

Smaller Microsoft resellers will face higher software prices following the vendor's decision to scrap cash rebates to its distribution partners. It claimed the move will pass on cost savings to small to medium sized enterprise (SME) resellers.

However, Microsoft has admitted that its action will also drive up software prices as distributors, which previously received regular rebates, compensate for the drop in turnover.

Leading distributors are threatening to raise prices as a result of the new scheme, which is likely to leave smaller resellers out of pocket. Rebates to SME resellers will begin from October, said Stephen Uden, head of channel marketing for Microsoft.

Details of the scheme have yet to be worked out, but Uden admitted that some resellers will not qualify for the rebates and will be subjected to the higher prices with no prospect of receiving any money back.

"Resellers will notice a small increase in prices, probably equal to a couple of per cent on the current price," claimed Uden, adding that resellers which do not qualify for the rebates this year may well qualify the following year. "We are not yet sure how many partners will qualify," he said.

Alex Tatham, UK country manager at distributor Ideal Hardware, confirmed that the company's prices had already risen by between one and two per cent.

"Our pricing has gone up this week, but this type of thing happens all the time," he said. However, Tatham admitted that the scheme "may not be good news for the small resellers who don't qualify for the rebates".

"Costs have quite simply got to be recovered," said another distributor. "The only way to do this is to put up prices, which is what we are looking to do this week."

Cathi Low, general manager of software for Computer 2000, told Computer Reseller News that some of its resellers placed large orders last week in anticipation of a price rise.

One reseller, who wished to remain anonymous, made it clear that Microsoft should not ignore the "little guys" so blatantly. "Smaller resellers make up a large percentage of Microsoft's annual turnover and shouldn't be ignored like this," he said.