Last year, a little-publicised channel conflict arose between US network software specialist Novell Inc, its authorised distributors and OEM NetWare resellers. The problem, according to the distributors, was that OEM customers had strayed from their traditional role as value-added resellers – that is, offering a package consisting of the NetWare product and items of specialised hardware – and were simply reselling NetWare as they had bought it from Novell. The result, particularly in the US, was that NetWare was becoming over-distributed, profit margins were falling, and the credibility of legitimate OEM customers, which were in the business of supplying NetWare-based packages, was damaged. Since then, the number of OEM resellers worldwide has been reduced to 30 from around 60, and Novell has just announced a point-of-sale agreement with one of the remaining resellers, Compex Inc, designed to make sure authorised distributors, such as Novell UK, get credit for sales of OEM NetWare. Compex’ Dwaine Robison explained that Compex has entered into a one-year agreement with Novell that binds it to selling NetWare with, amongst other things, its SCS hard disk interface, while rigorously policing its distributors, such as London-based Equinet Computers Ltd, to make sure they do not decide to un-bundle the Compex package and sell NetWare alone. Such is the theory: in practice, this may be harder to implement, for these distributors then use dealers to sell the package to the end user, leaving Compex in its policeman role twice-removed from the final transaction. This is a problem that Robison acknowledges, but argues that dealers will not return to un-bundling, because they will in fact find it more remunerative to sell the Compex packages complete. Despite the fact that Novell gets around $50m a year from OEM sales, its regional offices still have a decidedly ambivalent view to the value-added resellers: Robison is presently in talks with Novell UK to develop a working relationship, and from here will be hoping to smooth the path in other major markets, including Switzerland and Hong Kong – a task not to be underestimated, even when you are – as Robison is – an old friend of Novell boss Ray Noorda.
