CompTIA Summit: IBM and Lotus set to choose ESD partners

Jessica Hodgson reports from CompTIA?s Electronic Software Distribution Summit in Burnham, Buckinghamshire

Action Computer Supplies and Software Warehouse are understood to be close to a deal allowing them to participate in IBM and Lotus? electronic software distribution (ESD) pilot, due to be launched by the end of the year.

IBM and Lotus revealed in July that an ESD pilot would be rolled out during Q3 with clearing house Cybersource. By Q4, customers in the UK, Germany, Norway, Sweden, Finland, Denmark and the Netherlands will be able to purchase software electronically from the vendors and from selected resellers.

While Lotus is remaining tight-lipped about the identity of its UK partners, a source close to the project claimed that Software Warehouse and Action were near to signing contracts.

Sheryl Barnes, senior ESD manager at Lotus US, confirmed six European resellers would participate in the pilot: two in the UK, one in France, two in Germany and one in Sweden.

Steve Bennett, chairman of Software Warehouse, told delegates at CompTIA?s electronic commerce taskforce summit: ?Ourselves, Action, and one or two of the specialist e-commerce startups will be among the first to be involved in selling IBM/Lotus software over the internet in the UK. There?s definitely a market for ESD, but it won?t be a major consumer outlet. By the time you?ve sat out an hour-long download, it?s cost you more than buying from a retail outlet.?

One source claimed Software Warehouse did not have a relationship with a clearing house ? required by the Software Publisher?s Association as mandatory for an ESD pilot.

Other European resellers understood to be participating in the pilot include Swedish specialist online reseller Buyonet and French specialist Softgallery. Computacenter, also present at the CompTIA meeting, was also rumoured to be in talks.

Distributors lose out in cyber race

UK distributors could be shut out of the future of software distribution if they fail to respond quickly to the needs of the electronic markets.

At the CompTIA summit last week, Metrologie UK, Ingram Micro and Computer 2000 all claimed to be planning e-commerce pilots, although none had a pilot running.

Sheryl Barnes, senior ESD manager at Lotus US, said the large pan-European distributors were not ready to participate in IBM and Lotus? electronic software distribution pilots.

?The new cyber partners are moving quicker than some of the traditional ones,? she said. ?As soon as the pan-European distributors are ready, they will be incorporated.?

US ESD specialist distributor Digital River announced its intention to set up in the UK at CompTIA, vowing to set up a London base by the second quarter of next year.

Digital River representative Todd Frostad said the distributor ? set up as a joint venture between Fujitsu and Techsquared ? could offer services to resellers which the traditional distributor could not provide. Digital River focuses on services such as clearing house services, financial services, licence reporting, database management and marketing.

?We can provide services to resellers which Ingram Micro and Tech Data cannot,? Frostad said. ?We are the only distributor that can sidestep the clearing house role.? He said Digital River was looking for reseller partners in e-commerce.

Andy Barlow, MD of software licensing specialist Phocis, said: ?In a lot of cases, licence reporting is going straight from the user to the publisher. With payment and purchase orders going between customer, reseller and publisher, the traditional distributor just adds more cost with little value-add.?

Denis Moran, a partner at French reseller Softgallery, said: ?Broadline distributors don?t have the mindset to change quickly enough.? He said services such as encryption, clearing house transactions and license management would be vital for distributors to remain in the chain.

Returns wrangle delays standard

Standards for electronic software distribution are being held up by disagreement between resellers and publishers on operating returns policies over the internet.

Delegates at CompTIA?s summit were unable to agree on a coherent policy. There was concern that try-before-you-buy software would result in customers downloading software and keeping it without paying.

The Software Publisher?s Association (SPA) guidelines stipulate that an electronic ?letter of destruction? should guarantee software is disabled if a customer does not provide credit card details.

Freddy Tengberg, MD of Swedish reseller Buyonet, said: ?Allowing customers to take back software which they don?t want is like taking a movie back because you think it?s rubbish. It?s not acceptable.?

But other delegates said customers needed all the encouragement they could get from publishers and channel partners to use electronic channels.

Technologies under examination include runtime wrapping ? a method of encyption which allows software to be monitored, allowing resellers and publishers to keep track of potential fraud.

Sheryl Barnes, senior ESD manager at Lotus, played down the returns issue. ?It?s not that big a deal. We all want customer satisfaction, but in fact return rates are very low.? She cited ESD specialist Buyonet, which claimed its annual return rate was less than 0.5 per cent.

?People can pirate software today. The internet has not created the problem. But because the internet is a new medium there is an air of uncertainty about security,? she said.

UK leads field in Net buying

The UK is the largest market for purchasing software over the internet, according to a survey by Swedish ESD specialist Buyonet.

The survey, which looked at customer trends in buying software over the internet, found that the UK has a 24 per cent market share. Germany is next at 18 per cent, followed by the Nordic region at 12 per cent and Holland at eight per cent.

Consumers pay for the majority of their purchases over the internet by credit card card. Eighty-six per cent of internet transactions were made by credit card, while six per cent were carried out by more conventional banking methods, such as cheques.

The survey found that the most popular software item bought over the internet was communications software, such as email packages.

Utilities ? largely antivirus products ? and multimedia development tools followed close behind.

But the survey found that entertainment and games titles do not sell over the internet, despite recent moves by games companies to set up Web sites to allow consumers to download games over the Net.

Software Warehouse chairman Steve Bennett attributed this trend to the fact that consumers preferred to have a CD -Rom because it freed space on their hard disks.

Downloading games was also a lengthy process.

It was found that the average download size for one software application was 6Mb with the largest volume download 18Mb. The average time taken to download an 18Mb file over an ISDN link was 20 minutes. A home user with a 28.8Kbps modem will take more than an hour to download a file that is 6Mb in size.