PC builder trio in Microsoft schools coup

Microsoft invites Millennium, NS Optimum and Red Cat into inner circle following complaints it was 'distorting the market' with cut-price schools PC scheme

Microsoft has promoted three UK system builders to Local Named OEM status, enabling them to build machines for its cut-price schools PC scheme.

Millennium Business Systems (MBS), NS Optimum and Red Cat Distribution have been handed the exclusive badge, which has in the past been reserved for the largest domestic OEMs including Novatech, Stone, Viglen and Zoostorm.

This means the trio can buy at lower prices direct from Microsoft, rather than through distribution. Crucially, it also allows them to assemble SKUs under Microsoft's Technology Access Programme (TAP), which is designed to arm schools with affordable PCs.

Under sweeping changes to TAP that came in on 1 February, Microsoft made Windows available to OEMs involved for a nominal $1. This enabled them to pass on discounts of between £50 and £80 per machine to qualifying schools and colleges.

Only those with Local Named OEM status - which Microsoft normally reserves for volume players banging out more than 10,000 units a year - have the ability to build TAP SKUs. This controversially shut out a number of smaller local assemblers from targeting schools with their own machines just as the back-to-school market was gathering steam, leading to complaints it was distorting the market towards larger players and limiting choice among schools.

But Microsoft has confirmed it has inducted three more local players into its inner circle by handing MBS, NS Optimum and Red Cat Local Named OEM badges. CRN understands none of the trio was building anywhere near close to 10,000 units a year, meaning Microsoft loosened its criteria in recognition of their strength in the education sector.

NS Optimum is already marketing its involvement in TAP, claiming it can supply schools with PCs with Windows 7 Pro pre-installed from £169 plus VAT under the scheme.

MBS managing director Danny Miller confirmed his company has also made the grade, which he said was courtesy of its strong heritage in the education sector.

"We have been around for 28 years and over a long period of time have sustained and grown our position in the education market, which is why Microsoft entertained us [becoming a Local Named OEM partner]," he said.

Microsoft is right to keep a tight handle on the programme to ensure TAP devices aren't cynically diverted to end users who do not qualify, Miller argued.

"Microsoft has only good intentions - they are not out to hurt anyone," he said. "We are on pretty much every education framework going and it's a very arduous process to get approval. You shouldn't even be considered for TAP unless you are on these frameworks."

MBS has taken on two additional staff at its assembly facility in Wokingham and Miller said he was keen to sell TAP units through resellers as well as direct to customers.

Paul Silverthorn, director at Dorset-based Red Cat, said his firm was a trade-only system builder, meaning the move will benefit his business and that of its reseller partners.

"Red Cat's Microsoft Local Named OEM status now allows our trade customers the ability to promote the benefits of the Microsoft Technology Access Programme to their schools," he said.

Andrew Hopton, managing director of VeryPC - another UK system builder that was vocal about the impact TAP is having on local players - welcomed the trio's promotion, adding that his firm is itself "engaged and proactively working with Microsoft".

"It is good to see Microsoft acknowledge the adverse impact the TAP subsidies are having on smaller education-focused system builders," he said. "The TAP scheme has given larger system builders a significant cost subsidy on licencing to the education sector, putting smaller system builders in a position where they simply cannot compete.

"Allowing NS Optimum, Millennium and Red Cat access to the TAP scheme will give them a much fairer opportunity to compete in the education market, more importantly it will also give customers a wider choice of affordable and innovative technologies to choose from."

In a statement, Microsoft said: "We can confirm that Millennium Business Systems, NS Optimum and Red Cat Distribution are now Local Named OEM partners."