Microsoft to cut out OEM distributors

Microsoft has begun plans to support and service some of its top PC assemblers direct and cut out its original equipment manufacturer (OEM) distributors.

Microsoft has begun plans to support and service some of its top PC assemblers direct and cut out its original equipment manufacturer (OEM) distributors.

The software giant met with 16 so-called gold OEM's last week and offered them the chance to sign direct licensing deals or maintain relationships with its five OEM distributors, Datrontech, Ideal Hardware, Enta, Computer 2000 (C2000) and Actebis.

Gordon Davies, general manager at Microsoft system builder Compusys, confirmed that system builders with sales within a certain threshold - thought to be between £10m and £50m - were invited to Microsoft's headquarters.

Davies said Compusys would almost certainly decide to deal direct with Microsoft because the move has "at least 10 advantages. The main advantage is the cost," he said. "Others include access to a higher level of technical support, specific marketing focus for certain sectors and improved access to other OEM products."

Davies added that it would "be a relief not to have to deal with some of the poorer distribution partners".

Graeme Watt, UK regional managing director at C2000, said Microsoft's plans would leave all of its OEM distributors "wondering what it means for them".

"Microsoft had signalled that it was reviewing its routes to market and this would add some meat to that," said Watt.

Jane Webber, UK OEM sales manager at Microsoft, admitted that OEM distributors may "in the short term see a drop in revenue" because of the plans.

Microsoft's decision to handle some PC builders in-house is part of an annual review of the OEM channel, said Webber, adding that she would not rule out the possibility that the plans are a prelude to cutting the number of OEM distributors.

"I understand that the distribution partners are all on tender hooks and wondering what's going on, but things should in be clearer in a couple of weeks when the review is over," she said.

First published in Computer Reseller News