Discount-licensing.com, the trading name of
Staffordshire-based Disclic Ltd, says it is the first and so far
the only reseller of its kind.
The company, which launched its service this week, finds
insolvent or downsizing firms and makes their multiple-user
licences available to buyers – growing organisations or those with
too few licences for an existing user base. CDs do not necessarily
change hands, although they are available if required; what matters
more is the transfer of a right to use the software for a set
number of users.
The concept is of obvious benefit to the buyer. Discounts of
20%–50% below the prices of any authorised Microsoft reseller are
promised. But it also helps insolvency practitioners, letting them
realise a new asset for their creditors. Discount-licensing.com
acts as the middleman, taking a commission on each sale.
The transfer of second-hand corporate software is a complicated
process. The licences usually state how and when they can be
transferred. If transferred in breach of these conditions, the new
user will be using the software illegally. Until now, however, the
issue has only arisen in transfers between active companies in, for
example, acquisitions, mergers or divestments.
Discount-licensing.com says its business model is compliant with
Microsoft’s own transfer terms and conditions. It excludes
operating system licences, such as those of Windows XP, because of
transfer restrictions in these licences; but popular applications
like Office XP and server-based software like Windows Server 2000
are available.
The company first approached Microsoft with its plan over 14
months ago and a Microsoft spokeswoman confirmed to OUT-LAW today
that "the offerings from this company do meet Microsoft’s terms and
conditions."
The frustration surrounding the principle that businesses are
obligated to upgrade or purchase the most up to date versions of
software at a premium price is coming to an end, according to
discount-licensing.com, in much the same way, it
suggests, that the first second-hand car market began.
The supply is not unlimited. Discount-licensing.com estimates
that around 14,000 or 15,000 companies will be insolvent this year.
Of them, only around 10% may have licence agreements that are
suitable for transfer. So Microsoft is not about to suffer a
revenue crash.
Co-founder Jonathan Horley told OUT-LAW that he sees his first
challenge as one of education. "Everybody said that licences don't
have a value," he said. "Education is going to take some time."
It began last year when Horley contributed an article to the
Recovery Journal, a publication of the Association of Business
Recovery Professionals. He explained to insolvency practitioners
that perpetual software licences are an intangible asset that can
be realised, provided the licence terms do not prohibit a
transfer.
His point was in telling the insolvency practitioners what to
look for at the start of an insolvency process, i.e. how to
identify a multiple user licence, even if the PCs themselves are
being sold. The details must then be cross-referenced with the
software manufacturer. If the licences pass the test, they
represent an asset that has a value that can be realised.
Horley pointed out that his service can help with compliance.
Around one-third of business software is believed to be unlicensed
in the UK, putting companies at risk of action from the Business
Software Alliance. This is often because companies have purchased
some licences but not enough for their number of users. Now
companies that become aware of a licence
shortfall can become compliant more cheaply through
discount-licensing.com.
The website gives examples of job lots that can be bought – one
offer is for 150 copies of Office Professional XP, 10 copies of
Project 2000 Standard, one copy of FrontPage 2002 and seven copies
of Visio Professional 2002. From a reseller, that collection might
cost around £53,000. From discount-licensing.com, the cost is under
£37,000.
Horley explained that customers have to buy licences in batches
according to what is made available by each transferor. Licences
cannot be divided. At the moment, for instance,
discount-licensing.com can offer a batch of 220 user licences for
Office 2003. But if you need licences for just 150 users, unless
another batch more closely suits your needs, you might want to
compare this price with the price from a regular reseller.
But Horley points out that companies will take a view on
their anticipated growth when deciding what presents the best deal
– and that his company's prices are much lower than those from the
established competition.
