Office 2007 Referral Payment Pilot Irks Some Partners

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Microsoft's plan to pilot test an Office 2007 referral payment program with a limited number of large system builders has some smaller partners miffed.

The Referral Payment Pilot Program for Office Ready, which begins Jan. 30, is open to large system builders that pre-install the Microsoft Office Ready image on PCs sold to resellers. Once end users activate the license on their systems, the system builder then receives a referral payment, according to a document viewed by CRN.

As part of the program, partners are assigned a unique Referral Tracking Code (RTC) during enrollment that's injected into their pre-installed Microsoft Office Ready PC. When a customer activates a license, the partner will be assigned a credit through that system, the document said. Enrollment began Jan. 2.

Microsoft executives acknowledged that the pilot initially will be available only to some large system builders, but they said that if the program works, it may be rolled out to the entire channel within months.

Those selected to participate in the pilot will likely see a higher attach rate of Office sales, which has always been a sore spot for the channel, according to industry observers.

"We have not heard about Microsoft's offering of referral dollars to system builders for getting Office 2007 activations," said James Huang, marketing director at Amax Information Technology, a Fremont, Calif.-based system builder. "If it is true, it will be another way for system builders to earn more revenue from Microsoft product sales."

Still, the pilot has upset some mainstream system builders, who belive the program gives larger system makers an unfair advantage.

And that's not the only concern. System builders claim that the new Office 2007 medialess license kit they are instructed to preinstall means customers can activate Office 2007 through NewEgg, TigerDirect or another online discounter.

One VAR said it was his understanding that the Office Ready program would compensate all system builders with a referral fee if customers bought their PCs and activated Office 2007. But that's not the way it is.

"That was the original plan," said Glen Coffield, president of the Cheap Guys, Orlando, Fla. "So the theory now is that we preload Office on our machines, customers have 30 days to trial it and if they activate it through NewEgg, there's no commission for us."

Microsoft started shipping Office 2007 preinstallation kits to distributors on Jan. 18, although not all system builders -- including Cheap Guys -- have received copies yet. In any case, Coffield said he won't preload Office 2007 until he's eligible for a referral fee.

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