MS appoints new distys; Ingram, Redington reduce billing

Mumbai: With the confusion mounting over the double taxation on software, Microsoft's national distributors - Redington and Ingram Micro - have reportedly refrained from doing any business for the latter's software products in the past one month. This has resulted in a shortage of Microsoft's stock in the market, leaving software dealers across the country sitting on tenders and orders.

Around this same time Microsoft announced the appointment of Rashi Peripherals, Compuage Infocom and Neoteric Infomatique as their distributors who will concentrate on increasing the Microsoft Operating License Products (MOLP) business. With no business coming in from Redington and Ingram, software dealers are now veering towards these new distributors to fulfill their stock shortage.

While the vendor insists that the move is unrelated to the reduction in business coming in from its earlier distributors, what needs to be noted is that both Redington and Ingram concentrate on both boxes and MOLP part of Microsoft's business.

Throwing light on the confusion prevalent in the market, Alok Gupta, CEO of Delhi based Softmart Solutions said, “Both Ingram and Redington have not done any business for Microsoft in the past one month. As a result, Rashi, Compuage and Neoteric, who have recently been appointed by Microsoft are gaining momentum. The resellers of Ingram and Redington have no choice but to avail the products from these very distributors. The confusion prevailing around taxation on software is preventing both Ingram and Redington from doing any further business. There is no rotation of stock and we are pushing the old stock lying with us. However, both Redington and Ingram will have to arrive on a decision since more than 80 percent of the boxes and 40 percent of the MOLP business of Microsoft is routed through them.”

Giving his take on the situation, Harinder Salwan, Secretary of Infotech Software Dealers Association, Mumbai (ISODA) opined, “Microsoft has tweaked the software business to suit their comfort for a long time now. We are sitting with our orders and tenders and both Redington and Ingram have refused to execute any transaction until clarity on taxation is achieved. The newly appointed distributors are able to execute orders since they are following the new tax model that has been put in place.”

Hemant Chabria of Kolkata-based Chabria IT mentioned, “Our orders have slowed down since there is no clarity on taxation. Microsoft has approached us and indicated that they are working out ways to ensure that there isn't any supply shortage in the market.”

When contacted about the new appointments Rajeev Mittal, Group Director-Small and Medium Enterprise, Microsoft India said, “Yes, Microsoft has recently added on board three new distributors- Rashi Peripherals, Neoteric Infomatique and Compuage Infocom, for its volume license business. All these three partners are based out of Mumbai and will help in bolstering Microsoft's reach to the extensive partner community across the country.”

When questioned about why the vendor felt the need to add more distributors at this juncture, he said, “We have recently felt the requirement for providing for a larger network of distributors which could facilitate quicker business for Microsoft partners. Our three new distributors will help us achieve this. This entire network can then better support our SMB customers across tier-2 and 3 cities. These new tie-ups are in place to help us strengthen our conduit of solutions to our partners and eventually our customers.”

Mittal also felt that the new tie-ups would in no way impact Microsoft's existing tie up with Redington and Ingram.

On the issue of the news that Redington and Ingram have for the time being stopped billing with Microsoft, Mittal refused to comment and only said, “Both the distributors, remain as critical to our distribution network as they were.”

When contacted, Neoteric, Compuage Infocom and Rashi Peripherals confirmed their appointment by Microsoft for the vendor's MOLP business. Talking about the tie-up, Rajesh Goenka, VP-Sales and Marketing, Rashi Peripherals said, “Rashi was appointed as its Volume License Distributor in June itself. Besides Rashi, there are two other distributors who have been appointed by Microsoft at that time. We are very excited to be associated with the worldwide leader in software technology and will work towards achieving breadth business for Microsoft, especially in the smaller towns.”

Goenka further added that Rashi has been following the service tax route and is open for billing even today. However, Compuage and Neoteric refused to comment any further citing legal obligations.

Refusing to react to the stoppage in billing of Microsoft's products, PS Neogi, Director, Redington in a mail to The DQ Week said, “Our legal department has advised us to completely refrain from making any comments/observations at all on this issue.”

Despite repeated attempts Ingram Micro had not commented on the developments by the time of going to press.