Secondhand Microsoft software goes on sale

U.K. company starts trading in secondhand licenses, surprising some resellers. Could it be a new business model?

Microsoft has stunned some in the British reseller community by allowing a discount dealer to sell secondhand volume licenses, opening the floodgates for a used-software market in the U.K.

Disclic this week began offering secondhand software licenses from insolvent or downsizing companies to other businesses with Microsoft's blessing.

"Yes, we are doing that," said Jonathan Horley, a director at Disclic. "It's been in planning for a year and a half. Previously, a lot of companies didn't see software licenses as an asset, but this helps them see that."

A loophole in British insolvency laws and a clause within many Microsoft licenses that permits disused or unwanted volume licenses to be transferred enables Disclic to sell the licenses legally. The licenses are offered at a discount of around 20 to 50 percent below prices of any other authorized Microsoft reseller.

A Microsoft representative confirmed on Thursday that Disclic's resale of licenses "does meet Microsoft's terms and conditions."

Chris Lamb, the software licensing manager at Basilica, which sells products to large enterprises, said he was shocked to hear the software giant would allow the practice.

"This is certainly going to be a concern to us, as we focus on giving our customers a complete value-add service. I don't know what kind of prices these guys are offering, but if you can buy exactly the same licenses at a third of the price that could be very damaging," Lamb said.

Other resellers were also surprised that Microsoft would allow something so potentially damaging to partners and to its own licensing revenue.

"I've never heard the like, and I am stunned," said Gordon Davies, the commercial director of Microsoft reseller Compusys. "This is clearly going to take away revenue from the channel and from Microsoft," he said.

Davies is also considering whether Compusys may be able to turn the situation to its advantage.

"I'm split two ways about this because it could be the start of a whole new business proposal," Davies said. "Perhaps if there was an online portal, where you could bid for the licenses of insolvent businesses, it could create a new channel."

Zak Virdi, the software services director at Bytes, which aims its products at large companies, said Microsoft should monitor the activity of discount dealers closely. "This has got to be very carefully looked at," he said.

The new business approach of selling off volume software licenses could take time to sink in, Disclic's Horley said. "It's such a new concept to the way people bought licenses before. How people react in terms of the resellers and the users remains to be seen," he said.