Microsoft-Dell Download Deal A Win-Win

Dell last week announced that certain Microsoft software products, including Excel, Word and Outlook, now can be sold on the Dell Download store. Although Microsoft offers online purchases of downloads through its own storefront, The Microsoft Store, Dell will underprice Redmond. Currently, for example, Dell's Download Store is offering Office Home and Student 2007 for $84.99, while the Microsoft store is selling it for $149.95 (with a 60-day free trial offer).

Dell is the first reseller to be given this authorization, and it is timely, since Dell just suffered through a difficult quarter, dropping to the No. 2 position in the computer market behind HP. 

With direct marketing resellers like CDW gaining popularity, it’s a wise move on Microsoft’s part too.  With software downloads, Microsoft can ensure that the software being sold is legitimate. Given that software piracy is a big, expensive problem, there’s strong motivation for moving to this fulfillment model. Last year alone, overall losses due to software piracy in the U.S. are estimated at $9.1B.This is lost revenue which manufacturers and VARs need to recapture, especially in these hard times.

In addition, both Microsoft and Dell will see reduced costs for selling, shipping, and cost of goods.  But that’s not all; customers and the environment also benefit. Customers get the benefit of quick delivery, reduced shipping costs and no physical media to manage.  We all benefit from less waste.  And long term, it could signal a transformation in the software channel.   

Since this looks like a win-win, will Microsoft allow others to use download fulfillment?  Some solution providers are skeptical: "Microsoft is concerned about piracy, and opening up direct software sales to the channel would create a large burden of proof in terms of ensuring the software that's sold is legitimate," said Michael Cocanower, president of Phoenix-based Microsoft solution provider ITSynergy.  

Other industry experts expect it’s a natural step to authorize additional partners such as CDW and Softchoice.  One would certainly anticipate strategic partners like HP will be authorized.  That would provide efficiencies and leverage HP needs as it battles Cisco.  Microsoft is expected to give more details at the partner conference in July.

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