Novell dumps delivery costs on partners

Novell resellers could be compelled to bear the brunt of price hikes following the networking developer's decision to force distributors to pay for freight costs.

Under revised distribution contracts, which are still under negotiation but due to come into play on 1 January, Novell will no longer pick up costs of delivery from distributor to reseller.

This was one of a raft of changes that follow on the heels of the vendor's decision to slash two distributors - Ingram Micro and Ilion - from its line-up, leaving Computer 2000, CHS Electronics and Azlan as the remaining distributors (PC Dealer, 25 November).

Steve Lockie, general manager for networking at Computer 2000, said he anticipated the costs being passed on to resellers. 'It's going to be difficult to absorb these costs ourselves because margins are so tight. We will look very carefully at the pricing structure but because it's a set structure, I think it's going to be quite hard to manage.'

Another channel source said: 'It's a serious cost to distributors. The biggest issue is licensing. We are getting up to 50 orders a day and every time a licence goes out to the customer, we now pay for that.'

But Nick Turnbull, Azlan's product marketing manager for Novell, said he did not expect to pass costs on to the reseller: 'It's good because it enables us to manage cost more easily. Novell used to only ship on Wednesday and Friday, so now it's more manageable.'

But Murray Treece, channel sales manager for the UK and Ireland at Novell, played down the changes. 'This will effect every US software vendor. Under Securities Exchange Commission rules, every publicly quoted firm will only be allowed to recognise revenue when product arrives with the customer.

By putting delivery in the hands of the channel, the process becomes much more streamlined.'