Microsoft Extends XP Availability For Distributors

In an e-mail to ChannelWeb, a Microsoft spokesperson confirmed the existence of a flexible inventory program that will allow distributors to place their final orders for Windows XP OEM licenses by Jan. 31, 2009, and take delivery against those orders through May 30.

Previously, distributors had planned to purchase as many XP licenses as they could afford before Jan. 31, 2009, and sell them after the deadline. But once that inventory was gone, they'd have no choice but to turn away XP-seeking customers.

Distributors have until Dec. 31 to submit their XP license demand forecasts to Microsoft, and system builders are reportedly being asked to provide their own forecasts to distributors.

It's yet another sign of the market's resistance to Windows Vista, and of the growing realization within the channel that many customers have decided to simply skip Vista and wait for the arrival of Windows 7. Microsoft says that's slated for late 2009 or early 2010, but some reports have suggested it could come as early as mid-2009.

Distributors say the best part of the new arrangement is that they won't have to take title to the reserved XP licenses until they're sold to an end user, which helps them avoid having to sit on inventory for several months, which is a major concern in a low-margin business.

"This is a good solution to support the customers that are standardized still on XP," said Michael Schwab, co-president of D&H Distributing, Harrisburg, Pa. "In this case, people contemplated buying in larger quantities [of XP licenses] and holding on to them. But that would have caused a bubble [from] people buying five months of supply in January."

In addition to helping distributors, Microsoft's move will help system builders who've been nervously watching the Jan. 31 XP deadline creep up.

"It seems like Microsoft has listened to the channel and come up with a plan that fit our needs," said Joe Toste, vice president of marketing at Equus Computer Systems, a Minneapolis-based system builder.

Tim Ulmen, principal at Midwest IT Solutions Group, a Wichita, Kan.-based solution provider, says the move brings some peace of mind and enables him to move forward with upcoming deals with customers who've indicated a preference for XP-based machines.

"This should bring relief to the panic buyers and the large online retailers who would have probably bought up inventory in early January," said Ulmen. "I have to commend Microsoft on this channel-friendly strategy."

D&H and other distributors are currently talking to their largest customers to come up with demand forecasts. This work is taking on added importance, since most Microsoft channel partners believe that Microsoft will stick to its Jan. 31, 2009, XP deadline.

"I think that deadline is fixed in stone," said Schwab.