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IBM Software To Large Resellers: No More Volume Discounts

In a move that has inflamed large-account software resellers, IBM Software will stop giving them discounts and incentives on new Enterprise License Agreements (ELAs).

Several large resellers confirmed that a letter was sent out in late June telling them that, as of Aug. 1, the company will stop paying them rebates and incentives on new enterprise licenses. The change will affect a small number of very large partners, seven in the United States and three in Canada, according to IBM. At stake are hundreds of millions of dollars in service revenue, both sides of the dispute agree.

These partners say IBM is, in effect, cutting them out of a lucrative services business built around software asset and license management, in which companies like the old Corporate Software (now part of Software Spectrum), as well as ASAP Software, CompuCom Systems, Softchoice, Softmart, Software House International and others have made their money.

Some resellers say IBM is segmenting the market by customer size, cozying up to resellers targeting small to midsize businesses but taking larger accounts direct.

"IBM is firing the channel in the enterprise space," said one reseller who requested anonymity. "In SMB, they're throwing a lot of money around with partners."

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