Conflicting Interests

In a landmark decision regarding the
promotion of Microsofts Genuine Software initiative, all IT associations of
East India have agreed to end their differences with Microsoft ending the long
drawn deadlock between the leading vendor and the channel community, hence
improving the scope of business relationship and combat piracy jointly.

Speaking over the initiative, Alok Garodia, president,
Compass says, "We are glad that Microsoft and the channels in East India have
resolved all differences and have agreed to work together to ensure growth of
business for the channel as well as Microsoft. We are totally against software
piracy, since it is a huge loss of revenue for the channel. The cost to the
channel is significant."

The decision was reached after a series of four meetings with
all the eastern IT channels participating in the deliberations, besides
representatives from Microsoft. The meeting commenced between December 5-22,
2009. In the meeting, the entire East Indian IT community was represented with
Compass, ITAO, BITA, JCWA, CAD, JITA, NECTA and ITDAS representing West Bengal,
Orissa, Bihar, Jharkhand, Assam, and other Northeastern states.

Genesis of the Imbroglio

It has been estimated by Compass that members of these associations
represent over 80% of channel sales in the region, and have a significant
contribution in promoting ICT business in the region.

Earlier this month, IT associations across East India had put
on hold any business deal with Microsoft, banning the vendor in the East. With
Bihar and Jharkhand, leading the way and even discontinuing billing with
national distributors, IT associations across the East had put up their support.

The move came shortly after Microsoft began its anti-piracy
raids in Bihar. Unable to come to terms with Microsofts bold step, Bihar IT
Association (BITA) decided to impose a ban on the software major in the region,
with the support of Kolkata dealers.

"For quite some time, Microsoft has been indulging in
unethical trade practices. It is forcing the channels to buy its products,
threatening them with dire consequences. As a result, we decided to ban trade
relationships with Microsoft," says PK Sinha, spokesperson, BITA.

Similar has been the stance of dealers in Jamshedpur and
Ranchi. They have accused Microsoft of unethical trade practices and have moved
a resolution, thus banning Microsoft across the state.

Reiterates Raj Rajneesh, president, Jamshedpur IT Association
(JITA), "Microsoft is putting in atrocious sales targets for us. Already, there
is little demand for Microsoft products in the state on account of its high
prices, because of which our sales figures have dipped. Now in order to push up
sales, Microsoft is threatening dealers in the region with legal hassles, when
dealers couldnt comply with the dictated sales targets. Hence, we have decided
to ban all trade relations with Microsoft."

Speaking on a similar tone, dealers in the region have
accused Microsoft of promoting piracy itself.

Irate and frustrated over the ongoing legal hassles poised by
Microsoft, a dealer on condition of anonymity says, "I believe Microsoft is
itself promoting piracy across India. If it really wants to control piracy, it
can enable built-in software in its products for license key check. Many vendors
who deal in game segment have resorted to this technique, and we can see that
some major games cannot be pirated. Similarly, Microsoft can resort to such a
technique instead of harassing dealers if it is at all serious about controlling
piracy."

With BITA and JITA first facing the brunt of the much debated
Microsoft raids, Compass too made a move in Kolkata with the association
deciding on the formation of the confederation, and discussing its trade
relations with Microsoft.

Reaching Common Ground

Speaking over the progression of meetings, Rajiv Poddar, chairman, legal
cell, Compass says, "In the series of meetings following the ban on Microsoft,
the channel criticised Microsofts sales strategy and the legal hassles
involved. The channel was thoroughly dissatisfied with the vendor because of its
sales policy."

"However, we have finally reached an agreement whereby
Microsoft has promised to change its sales strategy admitting that its sales
personnel have brought disgrace to the company while Microsoft never endorses a
sales policy threatening dealers," he adds.

In the meeting, the channels had put up primarily two demands
to Microsoft. In the first place, dealers demanded return of the Q3 stocks and
withdrawal of the legal cases against the channel partners.

"The vendor has agreed to both of our demands. The
distributors have already taken back the Q3 Microsoft stock and by January 15,
2010, all cases against the channel partners by Microsoft on account of piracy
will be withdrawn", informs Poddar.

"We are extremely satisfied that the IT Associations of the
East approached Microsoft with their areas of concern in the channel and for
giving us an opportunity to address the problems and take pro-active measures.
Our recent engagement with the IT Associations has been meaningful and result
oriented, with a prime focus on working jointly to address the issues of
business as well as piracy. The key aspect of this understanding and the joint
resolution is its long term vision on relationship and partnership to check
piracy in the region and to promote the value of genuine software in the
interests of the consumers and the reseller community," says Vipul Sant,
director, Genuine Software Initiative, Microsoft India.

In an official communication earlier, Compass stated that in
October, IDC produced its annual study on the economic impact of IT, software
and the Microsoft ecosystem, illustrating why software piracy is a big concern
for Microsoft and the channel at large. The study covered the fifty-two
countries that account for 98%, about $1.414 tn of the total IT spending in
2009, and packaged software represents 21% of the above stated number.

"Nearly 700,000 hardware, software, services, and channel
firms make up the Microsoft ecosystem in these countries and for every unit of
revenue that Microsoft will earn in 2009, other companies will earn 8.70. We are
thankful to Microsoft for understanding the pain points of the channel and
agreeing to work together in resolving the issues. We expect to make a new
beginning with Microsoft and we are confident that the new year will usher in a
new phase of growth for the channel and Microsoft in India," Garodia concludes.

Reaffirming Microsofts commitment to the channels, Sant
concludes, "Microsoft is confident that its relationship with the IT
Associations of the East will only grow and cement further, which will enable
the channel and Microsoft to mutually collaborate on an on going basis to
contribute towards the overall development of the IT ecosystem of the country."

Avishek Rakshit/DQ Week

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