Tesco to Launch Own-Brand Software Range

U.K. supermarket chain Tesco Stores will launch six PC software applications under its own brand, including a word processor and antivirus software, later this month. The software packages will sell for under 20 pounds (US$37), and will include free online support via e-mail.

British “white label” software distributor Formjet will supply and support the software through its subsidiary, Formjet Innovations. Formjet holds the U.K. rights to distribute Panda Software’s antivirus tools and Ability Plus Software’s word processor and office applications, among others. It founded the Innovations subsidiary to sell versions of the software under other companies’ brands.

Formjet has software partners in 16 countries, and is looking for other sales outlets, company spokesman Graham O’Reilly said on Monday. “At the moment we’re concentrating on the U.K., and we are talking to other retail partners,” he said.

For Tesco, Formjet has branded the software’s packaging, code and online help with the supermarket chain’s name, O’Reilly said.

In a market where technical support is increasingly outsourced to offshore destinations with lower labor costs, Formjet has set up its support team south of London, in Crawley.

“It’s become quite a feature, these days, to say it’s U.K.-based support,” O’Reilly said.

The company keeps support costs down by handling everything by e-mail. Customers “get an automated reply with the top 10 answers based on the subject line of their e-mail,” O’Reilly said. Typically, that’s enough to deal with around half the questions the company receives; staff deal with the other half, he said.

The antivirus and security software packs will include one year’s e-mail support and software updates, he said. After that, customers can renew their subscription online or buy another pack at the supermarket. Formjet will impose no time limit on e-mail support for the other applications, he said.

Even at such a low price, it’s doubtful that Tesco will gain much market share, one analyst said, pointing to Microsoft’s continued dominance of the office software market, despite the availability of competing applications for much lower prices, or even for free.

“Many low-cost or free packages exist in each category, yet products that are many times the price of the cheapest option continue to dominate,” David Mitchell of Ovum wrote in an e-mail.

If it is to win customers, Tesco must make sure its applications can read and write files compatible with Microsoft’s Office suite, he said.

The software won’t look out of place on Tesco’s shelves. The supermarket already sells mobile phones, and is an ISP, Internet telephony operator and mobile virtual network operator.

-Peter Sayer, IDG News Service (Paris Bureau)

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