Microsoft has stunned its reseller community by allowing a discount dealer to sell second-hand volume licences, opening the floodgates for a second hand market.
Shocked vendors have reacted angrily to the news that Disclic, through discount-licensing.com, has been able to sell second-hand software licences from insolvent or downsizing firms to other businesses with Microsoft's blessing.
A loophole in British insolvency laws and a clause within many Microsoft licences that permits disused or unwanted volume licences to be transferred has enabled Disclic to sell the licences legally — and at a discount of around 20 to 50 percent below prices of any other authorised Microsoft reseller.
Disclic first approached Microsoft with its plan over 14 months ago and a Microsoft spokeswoman confirmed on Thursday that Disclic "does meet Microsoft's terms and conditions".
Chris Lamb, software licensing manager at Basilica, which sells products to large enterprises, said he was shocked to hear the software giant would allow the practice.
"This is certainly going to be a concern to us as we focus on giving our customers a complete value-add service. I don't know what kind of prices these guys are offering but if you can buy exactly the same licences at a third of the price that could be very damaging," Lamb told ZDNet UK.
Other resellers were also shocked that Microsoft would allow something so potentially damaging to its own partners and licensing revenue.
"I've never heard the like and I am stunned," said Gordon Davies, commercial director of Microsoft reseller Compusys. "This is clearly going to take away revenue from the channel and from Microsoft," he said.
Davies is also considering whether Compusys may be able to turn the situation to its advantage.
"I'm split two ways about this because it could be the start of a whole new business proposal, perhaps if there was an online portal where you could bid for the licences of insolvent businesses it could create a new channel," Davies said.
Zak Virdi, software services director at Bytes, which sells to large companies, said the software vendor should monitor the activity of discount dealers closely. "This has got to be very carefully looked at," he said.
Jonathan Horley, director at discount-licensing.com, confirmed that his company started selling second-hand Microsoft licences this week. "Yes we are doing that, it's been in planning for a year and a half. Previously a lot of companies didn't see software licences as an asset, but this helps them see that." "It's such a new concept to the way people bought licences before, how people react in terms of the resellers and the users remains to be seen," Horley added.
Talkback
Why are resellers shocked? This isn't unusual Microsoft business behaviour at all. Meaning: trying to crush competitors at whatever (whomever) cost.
Er, competitors? The people who are selling MICROSOFT licenses?
Nope, sorry, that doesn't make sense at all.
I've been a Linux user since 1993 and I'm more than happy to bash Microsoft for some of their more dubious practises.
But only if the grievances are genuine.
Knee-jerk oppositionism isn't helpful, and only causes real issues to be buried amongst the pile of meaningless complaints.
Obviously larger companies who's bread butter comes from selling Microsoft licences would be worried, but what's really wrong here?
If no one is using the license and you no longer want it then it should be no issue to resell it on to a third party. Otherwise these licenses would be sitting around gathering dust.
Then there's the case of a company going bankrupt. The licenses they have purchase are an asset so do have a value and should be allowed to be sold. Obviously provided that all the relevant rules are followed.
Alistair - http://www.0gravity.co.uk/
What is the difference between paid for software licences and personal computers??.. In financial terms, they are both capital expenditure that can be re couped when a company goes into liquidation. Microsoft would be wrong to block it, just as it would be wrong of Dell to stop th resale of pc's purchased from them.
How is the software different from the hardware? It takes some time and money to make one or the other, how much would it cost 1000 units of each ready for sale? I think the difference is very obvious. So the software developers are automatically better off. Why are they suppose to be privileged by the law, by being able to make their products unresellable… Why the law should deny us the right to sell anything we legally purchase…
David. Competitors as in Linux, Apple and others.
Microsoft will rather see customers buying second-hand Microsoft licenses then none at all. Because customers buying second-hand licenses are less likely to do something else then making use of those second-hand Microsoft licenses.
If that's stepping on some Microsoft Partners toes then, so it seems, that's not something Microsoft itself finds of more importance at the moment.
Others. Software isn't usually sold. Usually it's licensed under certain (changing) terms and conditions you may or may not agree with. And usually they come with fine print you might want to research to the fullest to really know what your rights and duties really are under which circumstances.