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Microsoft licence switch aims to plug margin gap

Microsoft has launched its updated Enterprise Agreement in what it claims is an attempt to counter resellers' plummeting margins.

Microsoft has launched its updated Enterprise Agreement in what it claims is an attempt to counter resellers' plummeting margins.

So far, 15 of the vendor's 21 large account resellers (LARs) have signed contracts transforming them into Enterprise Software Advisors (ESA).

The move marks the re-introduction of a fee-based model, which was abandoned in 1999.

"It is available to customers with 250 seats and upwards," said LAR and national partner sales manager Edward Hyde.

He added that it may be introduced into the SME arena at a later stage.

The scheme constitutes a three-year agreement under which customers pay an annual fee to cover all their desktops. The ESA fulfils all the responsibilities of LARs with the exception of invoicing customers and in return receives a fee from Microsoft instead of commission.

Hyde said Microsoft had introduced the model in response to demand from customers and channel to combat the problem of eroding margins. "The ESA model depends on partners as without them large parts of the market could not be reached. Basing the fee on a percentage of the deal should ensure the profitability of the channel," he said.

"Without commission very few resellers would manage to survive. This way we ensure that they make some profit."

Bytes Technology Group has recently signed the first deal in the Emea region.

Zak Virdi, software licensing manager at Bytes, said there were a few teething problems but expected them to be worked out soon.

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