Microsoft hunts service pirates in Australia

Microsoft hunts service pirates in Australia

Microsoft is staging an aggressive attack in Australia on unlicensed hosting service providers, appointing its first Australian reseller to help seek out and recruit those operating without a Service Providing Licensing Agreement (SPLA).

The software giant has signed an agreement with Melbourne-based IT services company and SPLA holder NewLease to resell the hosting licences to managed services providers on a monthly basis.

Microsoft regional hosting specialist Phil Meyer says non-compliance is a key concern in the hosting provider space.

Many companies are unaware that providing hosting services on a commercial basis requires an SPLA, he says.

"You can't fault a reseller for wanting to make a buck, but many have inappropriate licensing for hosting," he says. "These guys are undercutting those who charge the correct pricing fees."

Meyer says Microsoft has legally pursued various service providers because they did not hold a suitable licence. In several cases, it sent letters explaining why they should be moving to an SPLA arrangement.

The introduction of an indirect sales channel will allow Microsoft to reach the lower end of the services provider market and hopefully cut back the number of players working without the right licences, Meyer says.

"NewLease is going to a lot of these companies offering web hosting and telling them that they need to be operating under an SPLA," says Meyer. "They told us we have a lot of service providers that are not compliant."

Significant SPLA growth in terms of volume and partner numbers was also a deciding factor in adopting a reseller, he says. NewLease general manager Dawn Edmonds says the company already maintained relationships with about 100 hosting providers across Australia. These were predominantly small to medium-sized organisations.

"Microsoft had approached other SPLA holders with the view to do this," she says. "But I think they saw our offering was more suited to this market than the larger data centres." The main catalyst for the deal, however, was the poor understanding of licensing terms in the services market, Edmonds says.

"Many are under the impression they can pick up a licence off the shelf or under their standard select licensing agreement," she says. "But this is not the case when offering a commercial hosted service."

NewLease will be entitled to a rebate on customer sign-ups as well as payments based on the total value of the transaction.

While the new contract will bring in extra revenue, Edmonds says it will also help it to grow take-up of its new managed service offerings. These include hosted Microsoft Exchange and Share Point.

Meyer says Microsoft will continue to look after its existing SPLA holders, because most of the major ISPs already hold direct agreements with them. The majority of new agreements will be undertaken through NewLease.

"There are more than 700 providers today and we've only got 62 now — so you see we have a long way to go," he says.

Microsoft's existing SPLA holders include Telstra, WebCentral, IBM and Optus, Meyer says.

"NewLease offers support programmes and other technologies above Microsoft to smaller providers," he says. "They make the costs more justifiable for this market. The client can have a consolidated relationship for services through NewLease."

Microsoft will look to appoint a second reseller in the next six to 12 months as take-up of SPLAs increased, Meyer says.

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