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Microsoft Tier II OEM direct plans revealed

System builders spill the beans under the Monte Carlo sun

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Microsoft plans to start selling software direct to tier II OEMs in the UK.

Around 20 system builders were invited to a meeting at Microsoft HQ in Reading earlier this week where the proposals were put to them. The scheme, yet to be announced, will also allow tier IIs to buy OEM hardware products such as keyboards, cutting out the distribution channel, sources told The Register.

It looks like Microsoft aims to put the OEMs into different bands for pricing, depending on the volume of goods ordered, although no figures have yet been discussed. But the tier II system builders - typically with annual sales between 5 million and 50 million - which choose to go ahead with the scheme may have to commit financially to Microsoft, paying up front for their first month's supply, which will then be kept as a float.

If those attending Monday's meeting in Reading, which included Compusys, Watford Electronics and CFL Computer Systems, go for the idea, they will buy just the serial numbers and licenses from Microsoft. It is believed that the manuals will be bought from an approved Microsoft Authorised Replicator.

Authorised OEM distributors such as Datrontech, Ideal Hardware, Actevis and Computer 2000 stand to be affected by the move. As OEMs will be able to choose whether to buy straight from Microsoft or continue through distribution, Microsoft must surely be planning to undercut distributors to entice the system builders to buy direct.

And while the margins on these products for distributors are slim, they do act as a hook to bring in other business.

A round of individual meetings with system builders to see if they wish to join the scheme is already on the cards. Until now, only tier I PC assemblers were able to buy goods direct from Microsoft.

Paul Barge, Microsft OEM account manager for the UK, confirmed the planned move, saying that the software vendor's target was to initially get between five and ten tier II OEMS buying direct.

"Before, we'd never really had the account manager resource to do this. But now we have the resource after the restructure in the OEM sales team under Jane Webber," he added.

Barge reports to Webber, who recently replaced Des O'Carroll as Microsoft OEM channel sales manager. ®

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