Direct Ties With Microsoft Pay Off

The common complaint alleging pricing inequities on Microsoft software, for example, has taken on almost mythical qualities: The big systems vendors enjoy major discounts from Microsoft while white-box builders get charged an arm and a leg.

Some white-box solution providers said they worry that Microsoft is trying to put smaller systems builders out of business with new requirements and pricing policies that favor larger OEMs. Large-volume distributors have disagreed with this assessment in the past.

White-box solution providers and distributors that work directly with Microsoft say that obtaining the proper data and surrounding a business with the right people is all that is needed to ensure good pricing and support from the vendor.

"I honestly believe that the supposed massive price delta between the tier-one PC manufacturers and the white-box builders is a bit of a myth," said Todd Swank, director of marketing at Nor-Tech, a distributor based in Burnsville, Minn.

Brian Russell of Trademark Computer Products, a systems builder based in San Jose, Calif., added, "Careful negotiations with suppliers to ensure we remain competitive is the solution."

Several distributors and systems builders said they have picked up skills and expertise, as well as better pricing, by working directly with Microsoft.

Seneca Data, for example, has found its relationship with Microsoft to be a benefit rather than a problem. To meet requirements to work directly with Microsoft, Seneca Data sent many engineering employees for extensive training on Microsoft's products.

"Our engineering department helped develop our own recovery solution for our Microsoft operating systems," said Laura Burgmeier, director of OEM at Seneca Data, based in Syracuse, N.Y.

Although working with Microsoft is not as arduous as conventional wisdom would have it, many solution providers say the cost structure for the vendor's software still needs to be addressed.

But JoAnn Evans, vice president of Net/Works, a service provider in Fridley, Minn., said that perhaps big-name PC manufacturers are making a killing on

the software because of their own pricing strategies, not Microsoft's.

"Perhaps the big guys are making a lot of profit on the software by overcharging their customers," Evans said. "Is that why Michael Dell is ranked 27th on the Forbes billionaire list?"