Zones could be the latest solution provider to get out of the licensing game as Microsoft tightens the requirements around its top partner program.
SoftwareONE, a $3.3 billion solution provider based in Waukesha, Wis., is in advanced talks to acquire the licensing business of Auburn, Wash.-based Zones, No. 30 on the 2015 CRN Solution Provider 500, sources familiar the company's plans told CRN on Wednesday. Talks are "very serious" and a deal is "imminent," according to one of the sources.
Another source, who has ties with SoftwareONE, agreed that the company is attempting to close on another licensing business deal. The source said they were curious how SoftwareONE, No. 14 on the CRN SP 500, is financing the deal given that it would be the company's second licensing-related acquisition in five months.
A Zones spokeswoman said the company doesn't comment on rumors or speculation. SoftwareONE and Microsoft didn't return requests for comment.
There has been massive consolidation in recent months among the 15 or so Licensing Solution Providers (LSPs), the only Microsoft solution providers authorized to handle software volume licensing transactions. SoftwareONE, Zones and CompuCom are all Microsoft LSPs.
Sources told CRN in November that the Redmond, Wash.-based vendor was looking to reduce its number of U.S. LSPs from 15 to 6 by Tuesday -- the end of Microsoft's fiscal year -- as the company puts a greater emphasis on cloud, mobility and services sales.
A different source concurred, saying Wednesday that he expects the number of Microsoft LSPs to drop considerably over the next several years as a result of mergers and acquisitions.
"Microsoft is making a lot less money on the enterprise licenses," he said. "In two years, I don't think you'll see Microsoft selling any shrink-wrapped software. It will all be subscription-based."
Microsoft has been putting the squeeze on LSPs, with CRN reporting in November that the vendor was considering revoking CompuCom's LSP status because the solution provider wasn't meeting revenue targets or investing enough in technical certifications. That portion of the business was sold to SoftwareONE four months later.