Ditching the reseller: vendors going direct

By Allie Coyne on Nov 5, 2012 2:52 PM
Filed under Mobility

Analysis: Straight to buyer cutting channel’s grass.

Microsoft’s first push into the tablet market may have been an exciting period for the company, but it managed to annoy both its reseller and OEM partners in the process.

One of its major hardware partners, Acer, publicly decried Microsoft’s decision to compete with its OEM partners and said it would look at other alternatives to the Windows software.

It has since said it will delay launching its Windows RT tablets to watch how Microsoft’s Surface RT tablet fares.

Microsoft’s resellers were also left out of Surface sales. The tablet is currently only retailing through Microsoft’s website and its pop-up stores in the US and Canada. CEO Steve Ballmer said if partners want the device, they can get it off the website like other consumers.

Microsoft partners didn’t react well to the news.

In Australia, retailer Harvey Norman has unleashed a bonanza of Windows 8 products from the likes of Asus, HP, Samsung and Toshiba — 30 products at launch, with 56 in line for Christmas—- but was unhappy it would not be able to retail Microsoft’s own tablet.

Harvey Norman head of computers Ben Macintosh told CRN at the launch of Windows 8 the retailer was disappointed with Microsoft’s decision to go direct, but said it was in discussions with the software giant and hoped to have the Surface RT on shelves in the near future.

Microsoft’s plans for the x86-based Surface Pro, due to arrive in January, are not known, but it has indicated it will similarly go the direct route. 

Ballmer told CRN US Microsoft had ditched its channel route-to-market with the tablet because it was a “new” area for the company, but didn’t rule out a return to its partners.

“We made a decision to get into the market in a way where we know we’ll have a perfect experience to get started, and then we can always do more -- go broader,” he said.

“We had no idea what kind of a reaction we were going to get to the product, to the concept of us doing Surface. So we took our first step. It doesn’t mean we can’t take other steps.”

Partner backlash

In the interim, partners such as reseller Complete PC Solutions are hoping Microsoft will change its mind and let resellers in on the action.

Managing director Frank Triantafyllou said he was disappointed with the decision to go direct, but was holding out hope Microsoft would change his mind.

He said in the meantime, Microsoft had lost an opportunity to partner with the reseller as its preferred device.

“They told me it was only online, which was disappointing. So we are going hard with HP’s ElitePad 900,” he said. “We’ve already got the marketing around that, so we won’t make the Surface Pro our preferred device. We’ve chosen to go with HP and we are loyal in that way.

“The RT is a consumer model, so online makes sense, but with a corporate model it makes sense to go through the channel.”

Standard Computers Australia’s Chris Sambell echoed Triantafyllou’s sentiments and said Microsoft’s behaviour was “disgraceful”. 

“They’re basically cutting us out of the loop. We’ve been completely left in the dark,” he said. “We’d love to sell it and we’ve told them that, but we’ve had no response.”

Sambell accused Microsoft of attempting to mimic the Apple method of retail. 

“We’re an Apple reseller, but we aren’t allowed to sell iPads because Apple wants iPad customers to get the ‘Apple experience’ when they buy,” he said.

“Unfortunately Microsoft has gone down that path, and cut out the little guy.”

Sambell is similarly hoping Microsoft will extend its Surface Pro to resellers upon the device's January release.

He said if not, he would be forced to look at the grey market.

“It’s certainly an option we’d consider, but we hate the grey market. It’s not something that’s good for our industry,” he said. “But if our hands get tied we don’t have a choice. These things are cheaper overseas.

“They’ll probably make it available to us in three-to-six months time, but by then the rush is gone.”

 
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