Reseller News

Microsoft encourages channel's compliance

As software piracy and licence infringements become an ever-increasing problem for software vendors, Microsoft Corp. is putting initiatives in place which aim to ensure that malpractice is avoided at all costs.

Group manager for partner development and licensing compliance at Microsoft SA, Mark Reynolds, says counterfeit software does not only prevent the end-user from reaping the real benefits of software, but also puts the vendor's reputation in a bad light.

He notes that, according to Microsoft's research, about 10 percent of South Africa (SA) system builders are infringing software licence regulations. In addition to this, about 200 000 PCs with unlicensed operating systems are entering SA every year.

However, according to a recent BSA piracy study, the level of software piracy locally is below average, compared to international figures, he adds (SA 34 percent, and international average 39 percent).

In an effort to reduce this figure, Microsoft SA has 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 SA. This action is the result of a proactive campaign initiated this year to assess the level of hard-disk loading and counterfeit goods proliferating the channel.

"Just less than 10 percent of the systems builders investigated are involved in illegal activity. Thankfully, it is a lesser percentage than we expected, but, unfortunately, is still substantial," says Reynolds. "Software piracy in the channel is a lose-lose situation. Moreover, it simply promotes unethical business practices."

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 counterfeit, copy of Microsoft software onto numerous computers, which are then sold to unsuspecting customers.

Having established which system builders may be infringing in this regard Microsoft has issued "cease and desist" legal warning letters to each reseller, urging them to terminate the practice of installing 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 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, will allow us to reduce piracy in the channel." adds Reynolds.

Providing a reseller perspective on the issue, David Kan, CEO of Mustek Ltd., 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 as an essential part of maintaining the healthy cycle of innovation in the ICT industry. The revenues generated by intellectual property (IP) licences 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 -- both by 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 (Pty) Ltd., 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 SA says that it works directly with customers, and in cooperation with the Microsoft Certified Partner channel, to help companies to resolve their licensing problems, and to 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, as well as to help ensure product authenticity, go to