Toby Gawin, director of sales and marketing end user division, Microsoft Australia, talked to Australian Reseller News about the company's distribution strategies, its relationships with resellers, and the future of software distribution in Australia.
Australian Reseller News: Has Microsoft's emphasis on its Home products caused much of a change in its distribution model?
Gawin: Not in the short to medium term. The push with Microsoft Home products is really to show off the possibilities of multimedia and 32-bit software. We see full-packaged product such as Word and Excel still being sold through resellers, and the consumer products - for the foreseeable future - being sold in very much the same way.
ARN: How does the Microsoft distribution model differ between Australia and the US?
Gawin: I'd say we're cleaner in Australia than in the US; and I'd better explain that. Here, all of our dealers are aware that we sell only through distributors, who in turn supply the dealers throughout Australia. So in effect, we only have seven direct customers with whom we have trading relations. In the US, it's mainly through distributors but in some cases it's also direct to resellers.
ARN: How do you interact with your resellers?
Gawin: We have a marketing relationship through our marketing sales force in our branch offices, or in the case of retail, through the retail group here [in North Ryde] where our sales- people work with companies such as Ferntree, Praxa and BCA. But the buying relationship for full-package product would come through the resellers' respective distributors.
On the retail side, we have an account manager who, for example, would look after Harvey Norman and advise them on what our new promotions are going to be, or on floor stocking and the like. Fundamentally, though, Harvey Norman negotiate their terms with somebody like Merisel or Tech Pacific - so we're out of that loop.
ARN: What about smaller companies? Do they have some direct access to Microsoft?
Gawin: Yes. We have a program called Sales Partner Briefing for anyone selling Microsoft products. Basically, three times a year we go around the country and conduct a roadshow in every major city, inviting all the local resellers to attend.
If a sale partner has specific issues which they can't resolve with their distributor, then most of them know who their local Microsoft branch manager is. They can ring that person and ask for advice or help, and can even use our premises from time to time.
ARN: How early are you providing the resellers with information on new products? During the initial beta stages?
Gawin: No. Only once it's ready to be sold.
ARN: So they're not notified of upcoming products during beta stage?
Gawin: There'd be a few people, the larger systems integrators, who might participate in a beta program. Or they might have a particular customer we are aware of who might be very interested in the product, so they may be involved in the beta program.
But by and large, when we do the roadshows we talk about the products already available and whom we expect them to be sold to.
ARN: How well do you think resellers are appreciating the message you're trying to get across about the benefits of 32-bit applications?
Gawin: Some people pick it up quite quickly while others are asking: What's the point? People are only starting to appreciate just what Win95 can do for them. It's more than just a move from Window 3.1 to Windows 3.11. The advantages will accrue as more and more applications come out for Win95.
ARN: In your opinion, are those resellers who are ignoring the advantages of Win95 and 32-bit applications doing the wrong thing by their customers?
Gawin: Probably. Longer term, all of the new applications, and indeed the hardware from companies such as Hewlett-Packard, will be geared towards the 32-bit operating system. From a reseller point of view, I would be pointing people to 32-bit technology because that's what will be carrying us through to the year 2000. But if the customer is running a 386 with a single application, then the reseller should absolutely fulfill what that customer's after. There's no use selling a customer what they don't really need.
ARN: Does Microsoft feel that resellers are doing enough to promote Microsoft products?
Gawin: What we try to do with the smaller reseller is ensure that they're showing off our products the way that's best. Ideally, they've got demos running on some PCs. I guess it could always be better in terms of the way people are showing our products. We can't force the reseller to do any one thing, but we can advise them that if they do this or that then we believe they can increase the sales of our products. It's entirely up to them, though.
ARN: How effective has the Communiqué program been in providing benefits to the resellers?
Gawin: What we'd like to do longer term is have all the resellers on the Microsoft database. This way, when a Communiqué customer rings us for product information, we can go by post-code and give them the name and address of their local reseller.
ARN: Are there any firm plans for this?
Gawin: It's happening as we speak, but it probably won't be rolling out properly for another three or four months.
ARN: What about other styles of distribution? There was some talk last year about Microsoft providing multiple products on a single CD-ROM with the customer obtaining an unlock code directly from Microsoft.
Gawin: We don't have the infrastructure here in Australia - and in the US they very much realise this - to be able to cope with the thousands or potentially millions of customers ringing up for an unlock code. What's more likely is the potential for the distribution of software across the Internet. But that really is heavily dependent upon the level of bandwidth that you can get into the home; and I don't see that happening for about five to 10 years. Until you have the average user in the home linked up on optical fibre, its just not a viable way of doing it. And the unlock code would be a logistical nightmare.
The traditional way of selling through the reseller, where the user can come in and browse and ask for advice, is not going to change overnight.