VARs Criticize Sun's Solaris RTU Licensing

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An industry group of hardware resellers is up in arms over how Sun Microsystems licenses its Solaris operating system, saying the policies are a direct attack on the secondary, or used, computer market.

The Association of Service and Computer Dealers International (ASCDI) has denounced Sun's new Solaris Right To Use (RTU) licensing, enacted in late April. The licensing move forces customers purchasing used Sun hardware from sources other than the Santa Clara, Calif.-based vendor or its authorized channel to buy new Solaris RTU licenses, available only from Sun.

Sun's Cate: Vendor doesn't make money when a broker sells used equipment.

According to Sun documents obtained by CRN, the new OS licenses cost between $499 to $600,000 for Solaris 8 and 9, depending on the number of processors in a server.

Jerry Roberts, ASCDI spokesman and past chairman, said Sun is using the new license requirements to bury the secondary market by driving down the value of used hardware. "It's like if you could resell a car but not the motor," said Roberts, president of consulting firm ISV Services, Evergreen, Colo.

Sun disagrees with that characterization, saying its licensing plan protects the vendor and its iForce partners from gray-market activities, which Sun defines as any unauthorized hardware sale.

"Vendors like us don't make a nickel when a broker sells a used piece of equipment," said Bill Cate, director of Sun's U.S. iForce Program Office. "What we are interested in is our bottom line, our partners' bottom line and our shareholders' bottom line."

A disagreement on the definition of "gray market" is at the heart of the dispute. Roberts said Sun "has a problem distinguishing" between gray market and the used-equipment market, which he calls a legitimate channel.

Sun has policies to protect partners from used-equipment brokers and gray marketers, as well as shield customers from unauthorized equipment. Until now, Sun has selectively enforced those policies, according to the unauthorized used hardware brokers, which resell equipment and provide maintenance services.

Sun itself also sells refurbished hardware that it bundles with Solaris licensing--a combination that's often less expensive than what a third party can offer, Cate said.

That kind of activity has unauthorized resellers crying foul. Used Hewlett-Packard and IBM equipment offer a better value than used Sun equipment because the brokers don't have to factor in high OS license fees, they said.

"Sun is taking a big, anti-secondary market stance," said Bernd Appleby, president of maintenance services provider Terix Computer, Santa Clara. "They're trying to make it as hard as possible and expensive to engage the secondary market."

In contrast, Sun's iForce partners say it's about time Sun started policing the unauthorized channel.
The Sun VAR Council lobbied hard for the new licensing, said Tom Kuni, president of the group.

JOSEPH F. KOVAR contributed to this story.

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