EDITORIAL: When Microsoft sneezes

EDITORIAL: When Microsoft sneezes

Microsoft declared last week that it could no longer carry the burden of the sustained hammering our dollar has taken at the hands of its US counterpart. As a result, a statement was issued declaring the company "has been compelled to increase pricing of most of its full package product and volume licensing agreements by 10 per cent from October 1".

Like it or lump it, Microsoft is a very crucial and important part of the channel. If there is one vendor in the IT industry that touches just about every channel company, it would be Microsoft.

I would suggest even businesses dedicated 100 per cent to the behemoth's direct competitors would be able to find an order somewhere they have fulfilled, that included an element of Microsoft. If not, I would be pretty confident they have at least, a piece of hardware somewhere in the office either running a Microsoft operating system or application.

Put simply, Microsoft is pretty much ubiquitous in the channel, so to steal a popular phrase, when it sneezes, the whole channel catches a cold.

This latest price rise comes just 10 months after a similar hike, which saw the software giant add between 10 to 18 per cent to the price of most of its products, effective December 1, 2000. Prior to that, GST had impacted prices from July 1 2000, a point in time which signalled the end of about 18 months of Microsoft price stability.

While hardware is getting cheaper and cheaper, Microsoft is able to ensure software gets more and more expensive.

To be fair, an Aussie dollar worth 20 per cent less than it was this time last year was always going to impact the price we paid for technology. The American greenback is the international currency of IT.

Therefore, this price rise is no real surprise. It is, however, yet another hurdle in the path of coaxing technology buyers out of hibernation. It is a speed bump not needed, just at this time in the current industry hollow.

On the flip side, from adversity springs opportunity. As VIT's Hugh Bickerstaff noted in our analysis coverage of Microsoft's price hike (see story on page 1), there is a six-week window of opportunity for customers to upgrade or update before the new prices come into effect.

Resellers should follow VIT's lead, and open that window to make contact with their customer base to see if there are any plans to acquire new software in the near future. Presenting them with the information that such purchases would be more expensive from October 1, may be enough for them to fast-track up-coming Microsoft software procurements or even whole projects. At the very least, it is great customer relations to let them know about the situation.

Microsoft could not raise its prices across the board without being very public about it, but something it wasn't so upfront about was its discontinuation of the Office 2000 suite, in favour of the more expensive Office XP.

As with its Windows operating system, Microsoft's Office dominates the market it plays in. To the dismay of some partners, making Office 2000 obsolete came with no warning at all, and it was accompanied with a few thorny anomalies for the channel.

But that is another issue we will investigate and report on for you in an upcoming issue. Email me and tell me what the impact of a Microsoft price rise will have on your channel business.

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