April 7, 2006 12:01 PM PDT

Dealer in secondhand Microsoft licenses sees success

A company that began trading in secondhand licenses for Microsoft software last autumn has been attracting business from within the U.K and internationally.

Disclic has been able to sell more than 2,500 secondhand software licenses from insolvent or downsizing companies to other businesses through discount-licensing.com.

"As long as we stick to Microsoft terms and conditions, we can pretty much do what we want," Disclic director Noel Unwin told ZDNet UK. "We've had interest from America, Australia, India--which is quite surprising as we've specifically focused our marketing in the U.K.," added Unwin, who estimated that discount-licensing.com offers savings of about 35 percent.

It came to light last November that it was legal to trade in used licenses for Microsoft software, thanks to a loophole in British insolvency laws and a clause within many Microsoft licenses that permits disused or unwanted volume licenses to be transferred.

The success of the controversial business model was a "no-brainer," Unwin said, "businesses are going to get the same version of Microsoft software at a cheaper price."

The licensing company has sold license agreements to more than 50 customers since November. The biggest seller has been Microsoft Office 2000, followed by XP, Office 2003, Windows Server, SQL and Exchange.

Some software vendors were angered by the launch of the scheme, but more than 20 resellers have now contacted Disclic to discuss purchasing licensing agreements for customers, Unwin said.

Unwin also insisted that the company has a cordial relationship with Microsoft.

"The relationship is fairly good. Everybody seems to be winning. Microsoft is trying to attract businesses to volume licensing, as a lot of companies out there aren't license-compliant," said Unwin.

"About 5 percent of our sales revenue now comes through resellers, which is quite large considering they were initially worried," Unwin added. "Rubbishing our business model died a death quite quickly once we got resellers involved."

Tom Espiner of ZDNet UK reported from London.

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Genuine Windows Validation
I have to wonder how this meshes with the Windows Genuine validation scheme.
Posted by bobsaccount (6 comments )
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As I understand it...
...all that's being sold is the right to use the software. The reseller or end user will still need to install legitimates copy of the software, up to the number permitted by the licence.

Many companies may use these licences to legitimise existing installations that are in excess of the number of users permitted by their volume licences.
Posted by JFDMit (180 comments )
Link Flag
Validation may not be necessary
The customer should get the original volume license key (VLK) used to install the software (volume software doesn't use Product Activation) and can use that.
The genuine program may not be used with volume software, since it's not a good idea for companies to give their users access to VLKs. VLKs are widely used for pirated software: get the volume media and a valid VLK and you can install to your hearts content, until MS cuts off the VLK (usually with a new service pack)
Posted by Al_S_Cook (7 comments )
Link Flag
What's the loophole?
I'm wondering what the loophole is in the UK? Companies can legally resell Open License software without going bankrupt, as long as they follow the rules for transfers. Why is a loophole needed?
Posted by Al_S_Cook (7 comments )
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