Channelnomics

Oracle, ServiceKey End Gray-Market Dispute - Channelnomics

Under the terms of a proposed legal settlement, ServiceKey soon will be out of the Oracle Corp. hardware maintenance business, bringing to an end allegations that the Georgia-based solution provider engaged in a gray-market scheme to provide unauthorized support services to companies not under contract with the vendor.

The proposed settlement will result in no monetary damages. However, ServiceKey will destroy all information obtained in supporting Oracle hardware customers, surrender access to Oracle’s customer portal, keep detailed records of support interactions with Oracle and remain subject to audits for the next five years.

“The proposed settlement represents significant progress toward an understanding between Oracle and ServiceKey, with respect to ServiceKey’s appropriate role in the hardware service support market for Sun/Oracle systems,” ServiceKey CEO Angela Vines said in a statement to ComputerWorld.

Oracle initiated the lawsuit in February 2012 after discovering ServiceKey was allegedly using its own support service contract to gain access to information and materials and extend value-add services to customers using Oracle/Sun Microsystems hardware.

ServiceKey, according to reports, does have a valid Oracle support contract for a small amount of equipment.

A separate lawsuit continues against DLT Federal Business Systems Corporation, allegedly a party to the ServiceKey support services. The company has no relation to DLT Solutions, a large federal systems integrator.

Oracle is aggressive with regards to unauthorized access to its intellectual property and encroachment on its services business. It’s sued service provider Rimmi Street for offering unauthorized services, and it won a $306 million lawsuit against rival SAP for pilfering software specifications and support documentation.

Oracle isn’t alone when it comes to vendors going after solution providers that buck formal channels for supporting end users. Cisco Systems Inc., IBM Corp. and others have hunted solution providers that independently offer support contracts.

This aggressiveness is not surprising; hardware revenues and margins continue to fall. Maintenance and support contracts are huge sources of revenue for vendors, as they cover the cost of ongoing patching and future development costs. Such contracts are like insurance — fulfillment rarely exceeds the support capacity or expense.

The phrase “gray market” with regards to these programs has been called “misapplied,” as services and support methodologies and materials may be developed independently by solution providers. In the ServiceKey case, though, Oracle support for the minor contract was funneled and amplified to a broader set of customers.

The larger question: Is there a legitimate market for support contracts that don’t flow through vendors? Many solution providers develop methodologies and capacities for supporting vendor products. Independent support is contentious between solution providers and vendors, as it denies vendors access to lucrative revenues and insights into customer activity.

Perhaps one of the most famous cases of such a dispute is between Cisco and Multiven, an independent provider of support services for Cisco networking gear. Cisco sued Multiven, a California-based company owned by Peter Alfred-Adekeye, for allegedly hacking its partner portal to obtain support documentation. Multiven, which denied wrongdoing, countersued Cisco for antitrust violations.

Solution providers chaff under the restrictive terms of vendor contracts, but believe they have little choice if they don’t want to risk losing the other pieces of their products and services business.

Related Articles:

Leave a Reply