Give Us A Break

Microsoft, however, disputes the charge, saying they are typical co-marketing fliers.

In one of two recent letters mailed to SMB customers in the United States, Bob Clough, vice president of U.S. small business, sales and marketing at Microsoft, said customers can save up to 42 percent on Office XP Professional and Windows XP Professional until July 31 by purchasing through CDW.

Although the savings are linked to the benefits of Microsoft's Upgrade Advantage and Software Assurance programs and not through a special deal with CDW, resellers take issue with the fact that Microsoft appears to be steering SMB customers to call CDW, a move interpreted as direct poaching of SMB accounts typically served by smaller resellers and solution providers.

"CDW can show you how through Upgrade Advantage and Software Assurance," said Clough in the letter, dated April 30, which points customers to a toll-free number for CDW. "The combination of CDW and Microsoft solutions can help take your business to new heights."

Independent dealers have lost millions of dollars in business because of Microsoft's mailings to their SMB customers in the past month, said Alan Weinberger, chairman of The ASCII Group, a Washington organization that represents resellers. "This is an outrage. These mailings seem to be unfair federal and state trade practices on their face. We're not thinking of lawsuits, but resellers have long memories, and this won't be forgotten," he said.

In an e-mail to Clough and other Microsoft executives, David Burnside, president of A-TRAC Computer Sales and Service, Waltham, Mass., said, "This is outrageous behavior on Microsoft's part. I have always sold Microsoft products and upsell the Office product on every PC I sell, but that will not continue if this type of advertising and sales promotion keeps up."

In response, Clough said this is a typical co-marketing deal, similar to ones it has done in the past with Dell Computer, Hewlett-Packard and Insight. CDW initiated this co-marketing mailing piece with Microsoft, not the other way around, he said, adding that the fine print indicates that the 42 percent discount comes from the transition to Upgrade Advantage and Software Assurance licensing, and this information has been available to all resellers and solution providers to market as they wish.

"There are no special things we did for CDW with pricing. We chose CDW,or they chose us,because CDW wanted to do the co-marketing piece with us," Clough said.

Microsoft's top 1,000 VARs have also received similar marketing materials, he added.

Clough said he wants VARs to work more closely with Microsoft on the matter. "Both Microsoft and VARs can do a better job of interacting on opportunities we can provide on servicing our customer base," he said.

Published for the Week Of May 27, 2002