Enough Already

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For the past four years, I have been privileged to attend the annual meeting of Intel's top-tier partners, its Premier Provider crowd. Every single one of those years, one issue has galvanized the attendees like no other,the high price that systems builders are required to pay for Microsoft software. (Mind you, this is an Intel event.)

Collectively, the 350 Premier Providers gathered in San Diego last week represent the best of the best when it comes to the larger custom-systems community, which accounts for an estimated 40 percent of computers constructed annually on a worldwide basis. Even Microsoft recognizes the value of this group. Margo Day, general manager of Microsoft's U.S. partner group, revealed last week that while most high-tech solution providers struggled just to survive 2002, Microsoft's systems builder partners realized a 16 percent year-over-year growth in desktops from July to December. Growth in servers during that period was 37 percent.

HEATHER CLANCY Can be reached via e-mail at hclancy@cmp.com.

So, in the face of this track record, why won't Microsoft give these guys a price break to help close a gap that they say ranges from $50 to $60 per system?

The short answer is that Microsoft considers each systems builder as an individual customer. On this basis, no one of them could qualify for the volume pricing Microsoft gives to the world's largest OEMs. During a panel about ISV relations, one attendee suggested Microsoft establish a special program for Intel Premier Providers,certainly a worthy idea and one that Microsoft's Day seemed willing to consider.

Frankly, Microsoft needs to listen to this community. Licensing costs for its OS, in particular, have not fallen as fast as the rest of the components that go into constructing a system. Some argue this is a function of intellectual property, but I think Intel would agree that there is a lot of intellectual capital in hardware as well.

Someone told me last week that Microsoft accounted for 75 percent of the profits generated by the high-tech industry last year,a number I haven't confirmed but that doesn't surprise me. Little wonder, then, that systems builders are more fed up than ever or that two of the Intel Premier Providers that received Intel partner awards last week based their solutions on Linux.

Microsoft should take its cue and reconsider its position on pricing. At the very least, it must close the gap.

How would you like to see Microsoft address this disparity? HEATHER CLANCY, Editor at CRN, welcomes feedback at hclancy@cmp.com.

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