ASCII Group Accuses Microsoft Of Collusion, Discrimination In Surface Channel Play


The ASCII Group has some harsh words for its longtime ally Microsoft.

Alan Weinberger, chairman and CEO of ASCII, said Microsoft's decision to withhold Surface tablets from channel partners while authorizing an extremely small number of large account reseller (LAR) partners to sell the devices results in unfair trade practices.

"Microsoft is most likely in violation of various fair trade and other laws with this type of clear collusion with a small select group and discrimination against our group," Weinberger alleged. "We expect to meet with them and go over this issue."

[Related: Microsoft's Ballmer Avoids Surface Channel Strategy In Partner Conference Keynote]

The ASCII Group, an independent organization for SMB-focused solution providers, represents 2,000 North American resellers, many of which are also Microsoft partners. And like many other Microsoft partners, the ASCII community is frustrated by the software giant's repeated Surface snubs in recent weeks, Weinberger told CRN.

Last week, Microsoft unveiled a new program to move Surface tablets through channel partners, but VARs were disappointed to learn that the new Microsoft Devices Program included just 10 LAR partners as Authorized Surface Resellers: CDW, CompuCom Systems, En Pointe Technologies, Insight Enterprises, PC Connection, PCM, Softchoice, Softmart, SHI International and Zones. While Microsoft has said it plans to expand the devices program in the future, the company currently isn't offering Surface authorizations to additional partners.

Weinberger said the move unfairly favors direct-market resellers like CDW and Insight while putting SMB partners at a major competitive disadvantage. He also said Microsoft's strategy makes little sense since considering ASCII's reach as an organization.

"ASCII and our over 2,000 U.S. and Canadian members cannot understand why Microsoft would want to preclude us in favor of a very few that does not do nearly the volume of Microsoft products we do," he said. "We do, as a group, over $750 million in Microsoft products, which is more than any of the LARs."

ASCII members are also furious with Microsoft. Larry Goldman, CEO of Micro Tech Systems, a Chicago-based ASCII member, said the recent comments from Microsoft COO Kevin Turner -- who told attendees at Microsoft's Worldwide Partner Conference this week that they should bring their customers who are interested in buying Surface tablets to Microsoft's retail stores -- show the company doesn't understand channel partners.

"That [statement] was insane. There's no way I'd ever bring a customer inside a Microsoft Store," Goldman said. "Even if by some slim chance Microsoft has a reason for this strategy, they're not communicating it to partners at all. I'll never understand why they've held Surface back from the channel like they have."

Microsoft channel chief Jon Roskill said in a CRN interview that his company is taking a "phased approach" with the Surface rollout in the channel and wants to make sure it has the right amount of channel coverage and doesn't over-distribute the product. Roskill also said Microsoft will make adjustments to its Surface channel strategy depending on what happens over the next three months with the Microsoft Devices Program.

Weinberger said Microsoft's decision to bypass ASCII members is particularly upsetting since the ASCII Group was a major support of Microsoft during the U.S. Department of Justice's anti-trust case against the company. "This is not the way to treat a large partner like ASCII, who stood up for Microsoft during those tough times," he said.

Weinberger said ASCII isn't currently taking any legal action against Microsoft, but said the organization is actively conferring with members about what next steps should be taken to show their collective discontent. "We are reviewing all options," Weinberger said.

Even though ASCII has been a longtime supporter and ally of Microsoft, the group has butted heads with the software giant in the past. During the mid-1990s, ASCII took a public stand against Microsoft over the introduction of the Microsoft Network online service (now known as MSN), which the group claimed would be used to bypass channel partners and used to sell products like Windows 95 directly to business customers.

ASCII faced off against the software giant in the media and even went as far as publicly asking the Justice Department to investigate Microsoft over its Internet service bundle strategy; Weinberger said the strategy of rallying member support and publicly expressing partner concern eventually worked as Microsoft revised its MSN strategy for selling direct.

"I think we may have to face off again," Weinberger said.

PUBLISHED JULY 11, 2013