At 07:27 PM 10/31/01 +0100, Peder K. Hellegaard wrote:
>I have been the reseller in Denmark for some now but recently I received a
>terminanation letter from Altium with only one month margin.
>After this termination, we want to find another vendor of a good tool like
>Protel to promote, [...]
Altium has forced Mr. Hellegaard into this position. From my personal
experience I can understand it. Mr. Hellegaard, I would assume, invested a
great deal in developing sales contacts; it might take sales effort over
several years to develop a sale. A one-month notice may mean that several
years of work go down the drain, a severe blow to even a large reseller, a
complete disaster for a small one.
I don't know what kind of contract Mr. Hellegaard had with Protel. However,
regardless of contract, resellers have a general expectation that they will
continue to be able to resell the product under similar terms, and I doubt
that Mr. Hellegaard would have taken on this line of work if he had
anticipated that it was reasonably possible for this termination to take place.
My central business is providing printed circuit design services. However,
because I perceived a need that was not being served, I began to broker
Protel resales. There are not many such resales, as far as I can tell, it
is hard to find sellers and almost as hard to find buyers for second-hand
Some time back Protel opened up, without publicizing it, a discount policy
for service bureaus that essentially gave such customers a wholesale
discount. As I was already selling licenses, it immediately occurred to me
that, if Protel allowed the resale of such licenses, finding sellers would
no longer be a problem because the licenses could now be bought from Protel
directly and resold at whatever margin the reseller wanted to take, up to,
obviously, the difference between wholesale and retail, or even more if the
reseller was providing added value. But what would Protel's policy be on
this? So I asked the Protel salesman assigned to me, and he said he would
check. He came back with a statement that resale was fine, just as with any
other Protel license.
I thought this was brilliant. Protel was turning, potentially, every Protel
service bureau into a sales agent. Service bureaus already need to make and
keep many contacts in the industry and are in a prime position to sell the
software. It would be mutually beneficial. Because of the nature of the
market, such sales would grow slowly and sales through the sales offices
would not collapse, so such resale would not threaten the establish sales
offices. And with engineering software, especially, users beget users and
sales beget sales.
So I started directly buying and selling licenses. I sold three in the
first month, and I was working on more. Suddenly software resale income was
matching my service income, with the possibility of further increase. I put
an increased effort into developing sales contacts, and had a number of
pending sales, i.e., inquiries that had not yet developed into purchase
orders but had a high probability of doing so.
Then Protel pulled the plug. I was told that Protel Australia had *not*
approved resale of discounted service bureau licenses, that the left hand
had not known what the right hand was doing. The Protel product manager did
inquire as to whether or not I had any pending sales, i.e., purchase
orders, presumably he would have permitted me to complete those sales.
However, there were none. I asked for permission to buy for resale through
the end of the month (which was also the last month at $5995), since that
would allow me to nudge the prospective purchasers into moving quickly. It
was only a week or so, but this permission was denied.
Now, my investment in volume resale was small at this point; my
relationship with Protel/Altium has been very good and, while loss of that
particular kind of resale business was a blow, it was a blow only to hopes
and not to a major investment, as I imagine to be the case with Mr.
Hellegaard. If I were him, announcing my displeasure would be the least of
it, I'd be retaining an attorney if I didn't already have one.
There is beginning to be a bit of a bad odor around. I hope it is just some
temporary indigestion and that the Protel I was coming to know is not dead.
That would be a loss for all of us.
What are the symptoms?
(1) The sudden termination of the Utah office. I had correspondence with a
very disgruntled employee who claimed a number of negative things about the
termination; I wrote to Mr. Martin (Protel's founder), who responded
promptly with assurances that the Utah employees had been well-treated,
giving specifics; my investigation and response did not go further and my
inclination was to trust Mr. Martin.
(2) The long delay with no service pack for 99SE, after SP6. We had been
given reason to expect more frequent service packs, and it had been my
impression that a better router was going to come out and that it would be
free as a service pack to 99SE, a fair compensation for having suffered
with the present router for so long. It was also, supposedly, nearly ready.
We also were expecting a new version with a modest upgrade price, similar
to the upgrade from 98 to 99SE. So if Protel had decided to make the new
router part of the upgrade, and especially if it was as good as we were
being told, that would be fair. But the delay has been beyond reason, and
if I am correct, we are not yet into Beta for any of this. Since the Beta
period should be at least two months, perhaps more, I'd say that the next
version is either going to be inadequately Beta tested or it is not going
to come out this year. And the indications from Protel staff, off the
record, of course, had been that it would definitely be released in 2001.
(3) The announcement of the ATS program, radically changing the nature of
Protel support and upgrade. Assuming that the retail for the next version
is going to remain stable at $7995, and that ATS will remain $1995 as
presently announced (yes, thanks to our readers, I have now seen the number
on a Protel web page), Protel will be going from free support and modest
upgrade costs [recently equivalent to something like 10% maintenance per
year] to 25% maintenance, which is not far from double the industry
standard of 15%.
(4) It had seemed that the old Protel culture of a company behaving as if
it were besieged by irate users, maintaining secrecy behind the barricades,
was fading and that open communication was developing with users. Protel
very much listened to us with the SE release. There were a number of
initiatives talked about in Protel which would have taken this farther and
which still could if they are implemented; I cannot discuss these in detail
because of agreements of confidentiality. But so far these initiatives have
only been talk.
(5) Protel had allowed wide Beta participation; pretty much, if you wanted
to be a Beta tester, you could. I see today that an experienced user, a
frequent contributor to this list, was denied Beta participation. Software
testing is a difficult business. We see that we are still uncovering bugs
in 99SE SP6; certain aspects of the program are rarely used and it takes a
very broad Beta user base to be able to find as much as possible in that
phase, the wider the better.
Back to the ATS program, many users have commented on the denial of ATS
participation for current (pre Oct 1, 2001) licensees. Certainly it sounds
bad, but since *at this point* buying ATS would essentially be buying the
next upgrade, I expect, it is likely that Altium will announce a separate
upgrade program for the older licensees; I assume that it will include one
year's ATS, so I do not read this announcement as sinister. But it
certainly was impolitic. To say to someone, "You can't buy this thing which
we are claiming is a benefit," is, shall I say it, not very smart, even if
you are planning next month to offer something better or the same. It would
have been far better to announce *something* about what the policy will be
with current users.
Quite obviously, Altium is not consulting its users. I am the only elected
representative of the users (as chair of the Protel Users Association) and
I can say that I have definitely not been consulted about any of this.
Numerous times I have been asked by Protel officers to keep certain things
confidential and I have never betrayed that confidence, unless announcing
the very fact of the existence of confidential information is a betrayal,
which I think it is not. It is possible that some users have been consulted
under NDA. But, even if this is the case, I think it likely that it was
kept within Australia.
Perhaps Altium does not care about the U.S. Protel market....
The last company that I knew to abandon its core users, that forgot its
origin, was Accel Technologies. It survived for a while before being eaten.
Is that blindness contagious? Is there an antidote?
Easthampton, Massachusetts USA
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