Compliance Toolkit

UK firm sells second-hand Microsoft licences

Tags:
Licences,
Resellers,
Disclic,
Microsoft

Karen Gomm ZDNet.co.uk

Published: 10 Nov 2005 16:00 GMT

Microsoft has stunned its reseller community by allowing a discount dealer to sell second-hand volume licences, opening the floodgates for a second hand market.

Shocked vendors have reacted angrily to the news that Disclic, through discount-licensing.com, has been able to sell second-hand software licences from insolvent or downsizing firms to other businesses with Microsoft's blessing.

A loophole in British insolvency laws and a clause within many Microsoft licences that permits disused or unwanted volume licences to be transferred has enabled Disclic to sell the licences legally — and at a discount of around 20 to 50 percent below prices of any other authorised Microsoft reseller.

Disclic first approached Microsoft with its plan over 14 months ago and a Microsoft spokeswoman confirmed on Thursday that Disclic "does meet Microsoft's terms and conditions".

Chris Lamb, software licensing manager at Basilica, which sells products to large enterprises, said he was shocked to hear the software giant would allow the practice.

"This is certainly going to be a concern to us as we focus on giving our customers a complete value-add service. I don't know what kind of prices these guys are offering but if you can buy exactly the same licences at a third of the price that could be very damaging," Lamb told ZDNet UK.

Other resellers were also shocked that Microsoft would allow something so potentially damaging to its own partners and licensing revenue.

"I've never heard the like and I am stunned," said Gordon Davies, commercial director of Microsoft reseller Compusys. "This is clearly going to take away revenue from the channel and from Microsoft," he said.

Davies is also considering whether Compusys may be able to turn the situation to its advantage.

"I'm split two ways about this because it could be the start of a whole new business proposal, perhaps if there was an online portal where you could bid for the licences of insolvent businesses it could create a new channel," Davies said.

Zak Virdi, software services director at Bytes, which sells to large companies, said the software vendor should monitor the activity of discount dealers closely. "This has got to be very carefully looked at," he said.

Jonathan Horley, director at discount-licensing.com, confirmed that his company started selling second-hand Microsoft licences this week. "Yes we are doing that, it's been in planning for a year and a half. Previously a lot of companies didn't see software licences as an asset, but this helps them see that." "It's such a new concept to the way people bought licences before, how people react in terms of the resellers and the users remains to be seen," Horley added.