Microsoft to bolster compliance in the channel

Microsoft South Africa announced a tougher stance on non-compliance in the channel and has issued formal warnings to more than 64 alleged infringing system builder outfits across South Africa. This action is the result of a proactive campaign initiated this year to asses the level of hard-disk loading and counterfeit goods proliferating the channel.

"Just less than 10% of the systems builders investigated are involved in illegal activity. It is thankfully a lesser percentage than we expected but unfortunately still substantial", says Mark Reynolds, group manager for partner development and licensing compliance at Microsoft South Africa." Software piracy in the channel is simply a loose-loose situation. Moreover it simply promotes unethical business practice."

A national sweep, acting on anonymous tips and random investigations, has been conducted with the intention of establishing the baseline prevalence of the practice of hard-disk loading in the channel. This is a common form of software piracy whereby resellers load one licensed or sometimes a counterfeit copy of Microsoft software onto numerous computers which are then sold to unsuspecting customers.

Having established which system builders were potentially infringing in this regard Microsoft has issued "cease and desist" legal warning letters to each reseller urging them to terminate the instillation of unlicensed software or face possible civil or criminal legal action. "This is the first step in our process to clean up the channel with regards to compliance. System builders who continue this illegal activity will be simply find their business at risk. "says Reynolds.

"We have a global commitment to protect the channel for the channel. Microsoft unquestionably supports resellers who want to conduct business lawfully, professionally and honestly. We believe that this process as well as subsequent legal actions allows us to reduce piracy in the channel." adds Reynolds.

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Providing a reseller perspective on the issue David Kan, CEO of Mustek, says : "Mustek customers rely on us to simplify technology purchasing and management, while educating them on best practices around running a compliant technology environment. Activities such as hard-disk loading erode the financial health of our industry by taking advantage of a customer`s pricing sensitivities regardless of the future consequences. It also serves to undermine the integrity and expertise that customers expect from resellers like us."

Technology licensing is generally regarded an essential part of maintaining a healthy cycle of innovation in the IT industry. The revenues generated by Intellectual Property licenses make it possible for companies like Microsoft to consistently invest in research and development. " The industry is continually adopting the innovations that are a direct result of R&D spending and this leads to an increase in deployment. When you have increased deployment, the opportunity for further innovation downstream becomes available -- by both the originating company and potential licensees. This downstream innovation is what generates new IP, which generates new licensing, which generates new revenue. By utilizing this revenue for additional R&D, it furthers the cycle of innovation and that, of course, is a lasting benefit to the industry." says Reynolds

Adding support from the distributor segment is Anthony Fitzhenry, CEO of Axiz who says: " At Axiz we support and endorse the policy of intellectual copyright compliance. We would be happy to assist customers who have concerns or enquiries in this regard."

Microsoft South Africa works directly with customers and in co-operation with the Microsoft Certified Partner channel to help companies resolve their licensing problems and manage their current and future software assets. To learn more about protecting intellectual property, software asset management and to learn "how to tell" some of the security features of genuine software and help ensure product authenticity, go to www.microsoft.com/howtotell.