Microsoft is trying to incentivize its largest indirect hardware partners and system builders to preinstall Office 2007 on their systems, before these are sold to resellers, by offering them a referral payment when end users activate the license on those machines.

Qualified Microsoft partners were invited to participate in the Referral Payment Pilot Program for Office Ready about six weeks ago, but new systems with Windows Vista and Office 2007 preloaded were only made available for sale on Jan. 30.

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"The program is really designed for our large, indirect hardware partners who typically are not able to include Office on their PCs as these are sold through the channel. So this is a program designed to give them an incentive and reason to install Office on the PC itself," Chris Capossela, corporate vice president of the Microsoft Business Division Product Management Group, told eWEEK.

Those retailers and system builders that deal with customers directly and sell Office at the point of sale, make money on the sale price of Office, he said.

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But companies like Hewlett-Packard and others, which do not sell their PCs directly, the way Dell does, or through a retail store that they own, like Best Buy, had no incentive to attach Office to their PCs, he said.

"It's hard for HP to have a great business around Office as they are reliant on their channel partners," Capossela said. "So we designed this program, from the start, as an incentive program for HP, Lenovo and others to get them to attach Office to their PCs, which will then flow through the normal channels. We're really excited about the program, and we're being told by HP, Lenovo, Fujitsu, Sony and others that this is something they are really interested in."

The move, however, has been criticized by some of the smaller indirect system builders and hardware partners, who are not included in the pilot program, as well as from channel partners, who are concerned they will not get commissions if those preloaded licenses are activated.

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While Capossela said it would "be a wonderful thing if Microsoft was able to scale the program out to smaller, indirect system builders and hardware partners," he cautioned that "first we actually have to prove that it works."

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