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Dealer in secondhand Microsoft licenses sees success

Loophole in British insolvency laws and a clause within many Microsoft licenses are keys to U.K. dealer's business plan.

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.