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Microsoft channel braced

Software giant's OEM licensing division confirms it will operate with just one regional distributor in future leaving authorised wholesalers waiting to discover their destiny.

The four regional distribution partners that Microsoft uses to distribute its OEM software licences are preparing to learn their fate after the software vendor confirmed plans to overhaul its go-to-market strategy in the Middle East. In a move designed to facilitate Microsoft's transition to an in-country focused model, three of the vendor's four authorised OEM distributors - Aptec, Logicom, Mindware and Tech Data - will lose their regional status.

The three that don't make the cut will become in-country UAE distributors, giving Microsoft just one regional distributor for OEM licences.

Although talk of a push towards a more defined in-country distribution strategy has been mooted for some time, Channel Middle East understands Microsoft's OEM team is now in the closing stages of finalising its plans.

Tolga Altinordu, OEM director at Microsoft Gulf, said: "We really value in-country execution in terms of having a local footprint, breadth in the channel, and a sales and marketing force in the country. We're investing in local distributors and this is the direction we are taking. Having four regional distributors will be too much. We cannot expect the same level of investment and engagement from all the distributors because the market is not that big. We need them to focus and prioritise the markets where they want to operate," he said.

In addition to its existing quartet of regional distribution partners, Microsoft also uses other wholesalers to distribute its OEM licences in the Middle East. This includes Emitac Distribution in Qatar, Redington Gulf in Oman, and Unatrac and ZAK in Kuwait.

Microsoft has already communicated its plans to the distributors concerned and says it will consider a number of factors when deciding which distributor will retain its regional contract for OEM products.

"When it comes to regional distribution we're looking at the distributor with financial stability, credit facilities, product availability, streamlined operations and good engagement with partners," revealed Altinordu.

"A good breadth of channel partners is important and we expect to see them actively driving go-to-market strategies. In-country distribution is also very important to us - we don't see them just as a fulfillment house, but as a strategic partner. They help grow our business and fight piracy with us, and this is why we expect distributors to be present in each geography and to be able to reach local partners in each country. We'll be analysing those qualities in all of our distributors."

It remains to be seen how the three distributors who lose their regional OEM licence contracts will react to being reduced to in-country partners. The UAE PC assembly channel still remains small and that could prompt distributors to reconsider their relationship with Microsoft.

Hanspeter Eiselt, Middle East managing director at Tech Data - which has a strong corporate relationship with Microsoft - welcomes the imminent re-shaping of Microsoft's distribution structure. "It basically has a situation of over distribution and that is why it is trying to streamline," he said. "We are in support of that approach because nobody in the market has had a strong financial return from Microsoft and I think this will stabilise the situation."

The boss of another regional Microsoft OEM distributor said the move was a "question of focus" while a source at a rival wholesaler claimed Microsoft's plans mirror those of other large vendors in the region: "They are trying to break out who would be the best partner in each of the countries and play that out. It seems to be a discussion going on at the moment - HP has similar ideas for the North Gulf," said the source.

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