Microsoft Weighs Systems Builder Pricing Complaints

Zardon · Mar 12, 2003, 07:57 PM

Microsoft's top executives are reviewing proposals to address the pricing gap that Dell Computer enjoys on Windows and Office over Intel's 384 premier systems builders, according to Microsoft General Manager,SMB Channel Strategy Group, Kevin Wueste.

"We have definitely heard the message, and we are looking to see if there are things we can do to create a better situation," said Wueste in an interview here at CMP's Solution Provider Xchange."It is a hard one. We are very sensitive to this. I am spending hours a day on this."

Intel premier systems builders lashed out at the head of Microsoft's U.S. Partner Group, Margo Day, at an Intel conference earlier this month. The pricing disparity drew jeers from a number of solution providers at the conference. Some Intel premier systems builders estimated that Dell pays $40 less than they do for Office and $20 less for Windows.

One of the challenges Microsoft faces in making any pricing changes to its OEM Windows and Office pricing is that even the smallest decrease could result in a multimillion-dollar drop in licensing revenue.

Microsoft CEO Steve Ballmer said last fall he was reluctant to make even a small cut in OEM Windows and Office pricing because of the robust research and development funding that comes with the current licensing structure. Ballmer said any decrease would have a negative effect on Microsoft's ability to innovate.

Wueste, who took the channel post last October, emphasized that the systems builder channel is "super important" to Microsoft. He said the systems builder market represents a $2 billion-plus worldwide market for Microsoft.

Wueste said Microsoft, which has a long history of aggressive channel programs for partners focused on the small-business market, is "hungry" to do the right thing for partners of all stripes. Steven Burke, CRN

Mar 12, 2003, 07:57 PM	#1
Zardon DriverHeaven Founder Join Date: May 2002 Posts: 32,480 Rep Power: 179	Microsoft Weighs Systems Builder Pricing Complaints Microsoft's top executives are reviewing proposals to address the pricing gap that Dell Computer enjoys on Windows and Office over Intel's 384 premier systems builders, according to Microsoft General Manager,SMB Channel Strategy Group, Kevin Wueste. "We have definitely heard the message, and we are looking to see if there are things we can do to create a better situation," said Wueste in an interview here at CMP's Solution Provider Xchange."It is a hard one. We are very sensitive to this. I am spending hours a day on this." Intel premier systems builders lashed out at the head of Microsoft's U.S. Partner Group, Margo Day, at an Intel conference earlier this month. The pricing disparity drew jeers from a number of solution providers at the conference. Some Intel premier systems builders estimated that Dell pays $40 less than they do for Office and $20 less for Windows. One of the challenges Microsoft faces in making any pricing changes to its OEM Windows and Office pricing is that even the smallest decrease could result in a multimillion-dollar drop in licensing revenue. Microsoft CEO Steve Ballmer said last fall he was reluctant to make even a small cut in OEM Windows and Office pricing because of the robust research and development funding that comes with the current licensing structure. Ballmer said any decrease would have a negative effect on Microsoft's ability to innovate. Wueste, who took the channel post last October, emphasized that the systems builder channel is "super important" to Microsoft. He said the systems builder market represents a $2 billion-plus worldwide market for Microsoft. Wueste said Microsoft, which has a long history of aggressive channel programs for partners focused on the small-business market, is "hungry" to do the right thing for partners of all stripes. Steven Burke, CRN