OEMs lose out as MS cleans up its channel

Microsoft responds to reseller criticism by restricting OEMs to cut-down versions, and outlined its plans for Sniffer technology

Microsoft has finally tightened up on its OEM deals with Dell and Gateway 2000 after restricting them to selling its cut-down version of Office ? Microsoft Office Small Business Edition ? due out this month.

The move follows an outcry from dealers and OEMs, which blasted the software vendor for giving Dell and Gateway ?unfair? pricing terms earlier this year. As a result of the crackdown, sources suggested that Dell was looking for deals through distribution.

Steve McCall, sales and marketing director at direct OEM Centerprise, said: ?This means everything will be on a level playing field again. Dell and Gateway may still get some advantage, but because the product isn?t expensive the differential is going to be smaller.?

But one source said: ?It is more level in that they can?t get hold of full Office, but they still have an advantage because they?re only paying around #100 compared with the rest of the channel which has to pay about #150.?

In addition, Microsoft will be able to squash trading in grey, rebadged and counterfeit software with its Delivery Service Partner version of Office, with a device called Sniffer technology.

The technology works on OEM versions of Windows NT and W95 by checking existing files on the PC; if the operating system is not from an authorised source, then it will be unable to install the application.

Harry Thuillier, MD of Microsoft dealer Fraser Associates, said: ? I believe companies should earn the revenue for actual sales they make. Hopefully, this means software prices could be set to fall.?

But final touches to the technology has meant its release has been delayed until the end of June.

The delay accompanies Microsoft?s admission that Memphis (the Windows 95 upgrade) is not likely to be released until next year, causing its share price to fall.

David Weeks, Microsoft Windows 95 product manager, denied that there were problems. ?We never set any release dates for Memphis because we caught a cold on Windows 95 and we didn?t really want to repeat that situation.?