Microsoft Licensing Stirs Concern

The software vendor recently unveiled a new SMB licensing option, called Open Value, that lets customers buy a companywide, enterprise-style plan and spread out payments over three years. Under the model, many traditional resellers will become Microsoft Software Advisors that will be paid a fee from Microsoft for influencing a deal, but they will no longer be part of the fulfillment process.

Distributors such as Ingram Micro will become Authorized License Providers, handling licensing management and billing functions.

Direct marketers such as CDW Computer Centers and PC Connection can continue selling existing Open Licenses, become a Microsoft Software Advisor, or become an Authorized Direct Reseller to sell both Open License and Open Value options "if they meet certain qualifications," according to Microsoft. But it's not clear what those qualifications are.

CDW and PC Connection declined to comment on their plans for the new Microsoft licensing and agent model.

"It's a mixed bag," said Alan Weinberger, president of the ASCII Group, a channel organization representing more than 2,000 resellers. "Some will like it because they won't have to finance their customers. But some resellers won't like it because they won't contract with the end user. And they don't want a wholesaler to have details about their customers. I think these [partners will lose on the model."

Anthony Harbour, president and CEO of Harbour and Associates, a Richmond, Va.-based IT consulting firm, said he expects to see many solution providers upset about Microsoft's new agent and licensing plan.

"This new channel model will affect my business, as we have deals where we are able to make a margin of 5 percent to 10 percent," Harbour said. "I am concerned that once orders have been placed, the distributor now has the potential to own the customer and effectively cut the referring reseller out of the relationship."