Microsoft Shutters Small Business Rebate Program

Microsoft last week stopped offering cash rebates as part of its Open Value volume licensing program, and instead will offer customers funds to use to buy additional Microsoft products and services.

Open Value, aimed at small and midsize organizations with fewer than 250 seats, allows those organizations to manage Microsoft software licenses under a single agreement, and includes Software Assurance maintenance and support.

The Open Value program also allows solution providers to act as technology influencers and receive commissions, while distributors are aggregators that execute the licenses. However, according to a Microsoft spokesperson, the Open Value Rebate Program expired as scheduled on June 29, at the close of Microsoft's fiscal 2007 year.

In lieu of rebates, Open Value incentives will now consist of partner subsidy offers that allow customers to receive funds from Microsoft that they can use to buy additional services or products sold by the partner of their choice, according to the spokesperson.

"The partner benefits from the opportunity to sell additional services and products partially subsidized by Microsoft, bringing better value to the customer for a total solution, in addition to the original Microsoft software sale covered by the promotion," said the spokesperson.

Rebate dollars are unrestricted funds that may or may not affect partnering, but the subsidy offer is better in that it pulls the partner and customer together toward a total solution, the spokesperson added.

Prior to the change, Microsoft's U.S. resellers that purchased Open Value through distribution were eligible for a 10% rebate for customers that paid for three years upfront, or they could opt for three annualized payments and receive rebates of 10%, 5%, and 5% each year.

"For all existing Open Value sales, the second and third year invoices will be rebated for all partners in the original Open Value Rebate program," the spokesperson said.

Microsoft informed partners of the changes to the Open Value program via email, updates to the VarView partner website, and individual conversations, according to the spokesperson.

However, three Gold partners contacted by CRN said they haven't received any official communication from Microsoft about the changes. One source said he learned of the changes through his distribution rep.

"Unfortunately, this is a situation where distributors have to be the bearers of bad news, just as partners were when Software Assurance was announced and we had to make sure customers understood that they needed to buy it," said the source, who asked not to be named.

Rick Opal, vice president at Peters & Associates, a Gold partner in Oakbrook Terrace, Ill., expects Microsoft to funnel the rebate money back into the channel in a way that will benefit partners.