EDITORIAL: Pirates, phoenixes and conflict

EDITORIAL: Pirates, phoenixes and conflict

Software piracy. Phoenix companies. IBM channel conflict. In light of the tragic and senseless events in the US last week, these stories may seem inappropriate for the front page of a channel newspaper. The issues exposed in this week's ARN are all crucial for our little niche of the world but they pale into insignificance in the big picture.

Each of the three themes mentioned above is currently creating its own dramas for resellers.

Commoditisation of CD writers and a cultural disregard for copyright protection in Australia have constricted the ability of legitimate software vendors, distributors and resellers to maximise market potential.

Where once illegal software traders were restricted to computer fairs, market stalls and an underground network of cash dealers, inaction from law enforcement authorities has allowed them to flourish.

As demonstrated by Georgina Swan's on-the-spot report this week of a distributor's software store raid in one of Sydney's major shopping complexes, software pirates have made the move from the bazaar to the main street.

Until the appropriate authorities begin enforcing the statutes in place against such practices, little will change.

Meanwhile, the implementation of a broad-based GST in Australia in 1999 was supposed to be the saviour of the legitimate reseller channel by running "dodgy dealers" out of town.

Without the 20 per cent sales tax propping up the fly-by-night dealers who would close up shop and reopen elsewhere when sales tax was due, a more even playing field was anticipated under the more accountable GST.

But where there's a will, there's a way and sadly there is always some way to cheat the system and get an unfair advantage. The laws governing the ownership and receivership of businesses are inadequate, as demonstrated by the battle that Z-Tek's administrator is facing to secure some sort of return for the failed company's creditors.

At the very least, the commitment to and urgency in enforcing the existing laws have been degraded as a result of the administrative success of the new GST. More tax is being collected in a much simpler manner, so hunting down people who persist in evading their taxation responsibilities is not such a high priority.

Then there is channel conflict, an issue that plagued Compaq for years ,from its direct retail plans to its channel stuffing and affinity program aspirations. IBM, on the other hand, always seemed to be the company that understood that you either stood firmly behind your channel in Australia or you failed.

But with Dell's cost-effective direct model driving a wedge into IBM's hardware sales, this no longer appears to be the case. It is very hard for us to find a reseller of IBM hardware who is happy with the way they are being treated by the executives of what is perhaps still the strongest brand name in the IT industry.

To be fair, IBM is a very large organisation with a multitude of partners in all sorts of software, hardware and services capacities. Not all of them are disgruntled, but certainly hardware partners feel they are being cut out of the equation.

It is a dangerous predicament for IBM. There are not enough Australians online to rely totally on a direct Web model and it has nowhere near the resources needed to reach Australia's vast SME market in all its regional and industrial diversity.

As Compaq discovered in 1998, the problem for IBM will be that if it doesn't whole-heartedly support -- and be seen to support -- the channel, resellers will just sell someone else's product to their customers.

Tell me what you think about software piracy, "phoenix" companies and IBM's channel commitment.

Gerard Norsa is editor of Australian Reseller News. Contact him at printed in Australian Reseller News, September 19, 2001.

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