With Microsoft last week terminating its partnership with distributor Dataflow, a scramble is set to ensue to fill the gaping holes left in the vendor's retail and education markets.
The abandonment of its arrangement with Dataflow, which was "mutually agreed" upon and becomes effective from July 1, leaves Microsoft with only Tech Pacific, Express Data and ERA/Ingram as its local distributors.
Neither party would disclose the volume of business generated by the relationship, but industry sources indicated the edutainment distributor was doing its best work for "the big M" in education markets and not retail. Tech Pacific is Microsoft's retail star.
Microsoft's channels director, Geoff Wright, said the move was not related to the Retail 2000 trial in the US which sees it dealing direct with selected retailers with a nominated distributor handling dispatch (see ARN March 31, page 32).
"Three is a very healthy number," Wright said. "We are not changing our retail strategy. What has happened is that we have come to a mutual decision with Dataflow.
"Our individual distribution strategies are heading in different directions and we are each going to continue going after our own strategies," he added.
Microsoft would "always sit down to talk" with other distributors wanting to deal with it, according to Wright, who added that "there is a very healthy sub-distribution market in Australia".
The bottom line appears to be that Microsoft only wants to deal with the biggest distributors.
"We look for distributors that are broad-based, have a national model and cover all our product and customer segments. That is our model all over the world. Dataflow's strategy was different to that."
Dataflow's founder and chief executive officer, Jeffrey Tobias, and its managing director, Michael Touma, were both out of the country last week at the Electronic Entertainment Expo (E3) in Los Angeles.
However, according to Alex d'Azevedo, its chief financial officer, Microsoft and Dataflow had "different business and distribution strategies".
"Dataflow wanted to continue focusing on its value-added distribution model," d'Azevedo told ARN. "Our strength has always been in our marketing and managing of the channel and Microsoft requires less of those services from us and that is why we decided to part company.
"Basically, all we were doing was selling into the channel. We were just delivering. We want to position ourselves to be much more than just box movers by adding more value for our customers. Microsoft has a very big marketing back office and does a lot of those functions itself."