Big Blue termination cripples master VAR

Big Blue termination cripples master VAR

Two very different stories have emerged after IBM terminated the contract of a master VAR.

Post relational database specialist, Prism, has been advised by Big Blue that its contract to supply U2 UniVerse and UniData products and maintenance would not be renewed. That contract expires on February 15.

Big Blue has alleged that Prism breached the terms of its agreement but refused to provide details. According to Prism, IBM attributed the termination to rationalisation of its software channel.

Melbourne-based Meier Business Systems (MBS) is now the sole master VAR of U2 products in Australia.

IBM has written to Prism customers advising them that they should buy renewals and new licences from MBS.

Newly appointed DB2 specialist, Igatech Consulting, had access to the same U2 pricing but had decided not to put any focus on the technology because MBS was so entrenched, executive director, Gordon Brimble, said.

At the time of going to press, Prism's home page featured an open letter from managing director, Brian Morris, urging customers to email senior IBM executives to protest the decision.

"It is Prism's opinion that this means they have created a non-competitive market - to which IBM will sell U2 products and support at lower discounts. Prism believes that customers will have no alternative source of supply and the distributor [MBS] will in turn be able to pass these higher prices to end-users and resellers," the letter read.

"We have spent some time trying to source products from an IBM master distributor in the US. The door was firmly closed by IBM."

The letter goes on to say that Prism intends to honour customer contracts until February 28, 2007.

Health Inc, a Sydney-based reseller that digitises radiology practices, buys U2 products from Prism to build management systems. IT director, Terry Callaghan, has written to IBM to express his concern.

"Prism has provided a good service and I don't know these other people IBM has recommended," he said. "I wanted reassurances that this is not the start of a withdrawal from the Australian market."

What effect the change would have on pricing was also on Callaghan's mind.

"When one company owns the market, there is a tendency to charge whatever they can get away with," he said. "I don't think there has been a difference between Prism and MBS pricing in the past but who knows what will happen.

"We go into this with an open mind and are prepared to give MBS a go. But if prices start going up we will shift to a Microsoft SQL solution."

When contacted by ARN, IBM issued a statement attributed to software channel manager, Sue Hope.

"We have decided not to renew our agreement with Prism as a result of conduct that IBM considers amounts to breaches of our agreement by Prism," she stated.

"We will not publicly discuss the details of those breaches by Prism. However, we believe our decision is appropriate and necessary in the circumstances."

Prism managing director, Brian Morris, said IBM had never mentioned a breach of contract. Instead, it had told him it was channel rationalisation.

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