Microsoft to simplify licensing for SMEs

Smaller resellers face 'increasingly sophisticated' purchasing ethos

Microsoft has admitted that recent changes to its volume licensing model indicate how the company intends to do business in the future.

The software giant's revamped volume licensing programme came into effect in October. Microsoft took over the negotiation, billing and payment collection of future software releases and began conducting business with its large-account resellers on a fee-based model.

Edward Hyde, licensing partner sales manager, said the new scheme had been a success so far, and that Microsoft is considering similar changes to the way it does business with smaller partners.

"The channel is very competitive and smaller resellers are having to face an increasingly sophisticated purchasing ethos," he explained.

At present higher margins come from the consultancy/systems integrator area. "The installation and licensing side is profitable but there is not such a great margin opportunity, and this is an area we intend to look at over the next couple of years," said Hyde.

"At the lower margin end of the partner spectrum we need to simplify licensing models and ensure we provide proper support, because their business is valuable to us," he added.

Stan Acaster, general manager of Microsoft original equipment manufacturer Call Care Systems, agreed that something needs to be done to help the smaller resellers, which are losing out due to a lack of licensing knowledge.

"The problem revolves around margin. In any very small enterprise corners will be cut. If a small business buys a copy of Microsoft Office, it will load the CD onto virtually every machine. It is not worried about the fact that it doesn't have a piece of paper to allow it to do this," he said.

The problem will continue unless Microsoft helps smaller resellers to better address the situation, he added.