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Microsoft's online plans could shutout small players

Microsoft's online plans could shutout small players

Dick Smith and Myers ready to launch Internet stores in preparation for NITROMicrosoft is well under way with plans to launch New Interactive Technology for Resellers Online (NITRO), its Internet-based software sales outlet, and expects to go live in Australia before the year is out.

However, only the big players are keen to get involved, according to resellers contacted by ARN last week. In what could be another nail in the coffin of software sales for smaller retailers, larger retail organisations with a chain of outlets considered the NITRO to be a step forward and complementary to their plans for e-commerce.

While not actually doing encrypted credit card sales over the Internet at this stage, Ron Harris, managing director of Harris Technology, said the company has been accruing sales from its Web site since September 1996, currently averaging in excess of $300,000 per month. "We are very interested in the concept and I have been keeping an eye on it. We believe in Internet commerce and think it is a fait accompli. It is not a question of whether it's a good idea or not, but it does have to be done properly," said Harris.

Rachelle Connor, public relations manager for Dick Smith Electronics, said that considering the national retail group's strong trading relationship with Microsoft, it would definitely support such a move.

"That would complement the live Internet trading facility we will be launching in three to four weeks," she said. "Every item we sell that is 'mailable' - and that numbers over 15,000 items - will be available from our Web site. Having Microsoft divert customers to us would be a bonus."

Frank Kavanagh, Myer-Grace Bros' national buyer for computers and software, said the huge Coles-Myer retail group is currently deploying a "state-of-the-art" live-purchase Web site across all its business divisions and that "NITRO would fit into that plan very nicely". However, a number of smaller retailers spoken to by ARN were suspicious about the message Microsoft is sending with NITRO.

Tom McHenry, principal at Access Business Computers in Brisbane, warned larger retailers that NITRO could be a precursor to direct sales.

"I would be surprised if Microsoft doesn't turn around and sell direct at some time in the future. As soon as a large enough group of people become used to purchasing over the Internet, why would they [Microsoft] need resellers?" said McHenry.

Lothar Schwigtenberg, managing director at TDC Computers in Sydney, was also suspicious of the ramifications of NITRO. He told ARN that only businesses large enough to cover the overheads of a live Web site would be competitive in such an environment.

"Internet trading can never replace the personal touch," Schwigtenberg said. "But wouldn't Microsoft then be able to undercut any small dealer? There will be no point in us selling their software anymore."

Tony Finnemore, managing director at Sydney-based VAR Micro Office, agreed with Schwigtenberg. He said the online selling capabilities needed for NITRO would not be achievable for very many smaller retailers. He told ARN the 3 per cent charge from credit card transactions and the costs in setting up and maintaining a Web site would cut already thin margins to the point where it is not worth the effort.

Alan Bowman, Microsoft Australia's director, consumer and retail sales and marketing,said the software giant will logically have local resellers as part of the project but said: "this will depend on their status of being able to offer online purchase solutions today. The leading principle behind this service is lead referral to our online channel partners who can then complete the customer transaction," Bowman said.


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