France Challenges Microsoft in Software Re-Fit (Reuters) [LWN.net]

Gut feeling ...

Posted Jun 18, 2004 12:39 UTC (Fri) by AnswerGuy (subscriber, #1256) [Link]

My gut feeling is that this particular case is one of using Free Software as a negotiating tactic to win pricing and licensing concessions by Microsoft.

I have no evidence to back this up and I lack the investigative resources to find it. However that's what my instincts tell me and, if I was an investigative reporter, I'd be looking for confirmation and credible refutation.

No doubt they will launch some feasibility efforts and pilot projects. These will probably meet with some success and various ministries and departments will certainly use Linux for some services (probably already are for DNS, intranet/web, etc). However, the bulk of their bureaucracy will probably be
enslaved to Microsoft for several years.

At the highest levels this is probably a negotiating stategy.

However, at the lower levels I suspect it's alot like so many of the organizations I've worked with. Much of the IT and technical staff are probably taking this opportunity to get more Linux (and BSD, and even Mac OS X) into their environments because they simply prefer UNIX based solutions.

So this is still a big win for free software in general. Because it gets the opportunity to shine in its niches and grow through grassroots means.

I would suspect that the biggest advances could come from POS (point of sale/service) vertical applications. I'm sure France as something like the U.S. DMV (Department of Motor Vehicles) --- where every clerk has a computer which is functionally just a graphical terminal and which has not need for general productivity applications. Those are perfect for Linux and a terrible fit for MS Windows for such a wide range of reasons it's just pathetic. It would be almost trivial for them to convert those kinds system s into LTSP or other diskless configurations. (The can even leave the disks in, just reconfigure for PXE boot, giving very easy rollback as necessary). Some of the last bastions will be the mid and higher level bureaucrats and ministers who will cling to their copies of MS Outlook, Powerpoint, etc until it becomes such a matter of public embarassment that they will feel compelled to change!

JimD

Gut feeling ...

Posted Jun 19, 2004 5:23 UTC (Sat) by mdekkers (guest, #85) [Link]

I totally agree - I have been doing government Open Source for some time, and this statement is so full of political messages to Microsoft, it is blatantly obvious. There will be pilot projects, there will be really good efforts by dedicated and motivate people, but at the end of the day, this seems to be about MS, not FLOSS. Bear with me:

Civil service minister Renaud Dutreil told Reuters France wanted to use "open-source" software providers to resupply part of the almost one million state computers under a government cost-cutting drive designed to trim a bulging public deficit.
- Here they are saying: look at the size of the project. Almost a million seats you are going to miss, only because we can't afford your prices.

"We are not starting a war against Microsoft, or against American companies in the software sector," Dutreil said in an interview. But he added that Microsoft "must return to being one supplier to the state among others."
- We want to be your friend, but we have to be seen to make a token effort to work with others.

"The competition is open," he said. "My estimate is that we can cut the state software bill at least in half."...At stake, in the case of office suite software alone, is around 300 million euros ($362.5 million) worth of software to be introduced to state computers over three years. Savings on operating systems could be of a similar order, officials said.
- We pay 600 million euro's for this stuff today. We want to pay no more then 300 million. Match this price and you have a deal.

Microsoft ... said it would seek to show the French government it could offer software at a competitive price."In fact, open-source software is not free. It is very expensive because it shifts the cost to maintenance, services, integration and training," Microsoft France chief Christophe Aulnette said.
- We can meet this price - in fact, it is pretty much par for the course for us to do so in this case - any short term perceived loss of revenue will be covered by our Linux Slush Fund, and we know that if we match your price you will not go through the pain of migrating away from what you are using today.
----
I am sorry if I come across as cynical, but believe it - this is how it works. There is a simple mantra: "Open Source will not win on cost alone." Repeat 3 times daily.

Several factors play against the cost argument. First, whenever it counts, Microsoft can and will pricematch. It is a fact of life that as things stand today, MS can afford to give all their software away free of charge, and still be around 15 years from now. Second, for most enterprises, FLOSS on the desktop is cheaper only over a 5+ year timeframe, due to high migration costs. Fact is that most executives are seriously risk averse, and that means that change - any change - is going to be expensive. This is part of the cost of the migration process. Moreover, most execs in IT don't look more then 3 years ahead at any given time. for government this problem is even worse - The government event-horizon is defined around election time.

If you want to sucessfully do FLOSS, you must emphasise the benefits of Open Source as a licensing model, as a development model and as a business model - price should not be a factor. Munich is a good example - cost is higher, but the long-term benefits are well articulated, so the decision to stick with closed source software is very, very hard to defend from the political, business and technology perspectives.

Gut feeling ...

Posted Jun 20, 2004 17:10 UTC (Sun) by Zelatrix (guest, #5163) [Link]

I agree with all of the points you make. I would like to add a further point of my own: it is the end of monopoly rent for Microsoft. There is a cost associated with implementing and maintaining a major IT system; in this case it seems that a fair price for the work would be around 300 million Euro.

Because if Microsoft don't want to do it for that price, IBM or Novell will be happy to. With the added benefit to the French that their future IT spend would happen in the genuinely free Linux market. Having the customer say "Match this price and you have a deal" is a lot better than having Microsoft say "Pay this price because you have no alternative".

Gut feeling ...

Posted Jun 20, 2004 19:21 UTC (Sun) by snoolan (guest, #22472) [Link]

Even if
<Quote> "In fact, open-source software is not free. It is very expensive because it shifts the cost to maintenance, services, integration and training," Microsoft France chief Christophe Aulnette said.
</Quote>
is true, shifting the cost into the local community and away from exporting it to the USA is a good thing and in Frances own interest.
- and the my experience is that the premise is flawed!

Gut feeling ...

Posted Jun 21, 2004 2:22 UTC (Mon) by paulj (subscriber, #341) [Link]

MS can afford to give all their software away free of charge, and still be around 15 years from now.

Right, and then they'll no longer be able to give away their software anymore.

Basically, they're on the revenue road to nowhere now, at least for very large corporate/institutional site licence revenues. Every big MS customer now knows they can shake down MS for huge discounts by considering Linux. The more this goes on, the bigger the general deflationary pressure will be on MS licence revenue, eventually MS will have to do something about this and curb the discounts, not even MS have infinite reserves. At which point you'll start to see a few of these large institutional/corporates actually make good on their Linux threat, those that were serious to some degree in the first place. And the more that goes on, the more the other corporates/institutionals will come to see the Linux option as a serious one, not just a negotiation tactic.

IBM, Novell, et al will be cheer-leading the Linux alternative, providing the credibility to the Linux alternative to make it more than just a tactic. Providing yet more momentum.

Anyway, MS's corporate desktop revenue stream is slowly going to be eaten away over the next 5 to 10 years. To what extent will be interesting to see :)

Gut feeling ...

Posted Jun 21, 2004 8:30 UTC (Mon) by ccchips (guest, #3222) [Link]

One of the things that really irks me about Microsoft and pricing: After they gouge small-to-medium operations for high deployment and upgrade license fees, then they have the gall to charge for technical support on top of that.

Free tech support for high initial outlay was one of the things that appealed to me when I helped my company switch to Microsoft some 15 years ago. Now, I see no advantage whatsoever, and their corporate treachery has made me regret having chosen them, every waking moment I think about it.

Gut feeling ...

Posted Jun 22, 2004 6:07 UTC (Tue) by Wol (guest, #4433) [Link]

Several factors play against the cost argument. First, whenever it counts, Microsoft can and will pricematch. It is a fact of life that as things stand today, MS can afford to give all their software away free of charge, and still be around 15 years from now. Second, for most enterprises, FLOSS on the desktop is cheaper only over a 5+ year timeframe, due to high migration costs. Fact is that most executives are seriously risk averse, and that means that change - any change - is going to be expensive.

It's also a fact of life that Wall Street is populated by wolves. Do Gates et al have the shares left to vote down a shareholder revolt? I don't think they do.

If MS's revenues come down, then all being equal their PE goes up. Except their PE is already too high. So that means their share price goes down ...

MS can now (1) do nothing. Their shareholders will start panicking and somebody (probably CA) will see an opportunity for a hostile bid. Or (2) MS issues a dividend. That will steady nerves, for a little while at least ... or (3) MS starts buying back shares to prop up the price.

Option 1 is obviously a no-no. And it places the executives' fortunes at risk of a shareholder lawsuit and/or an EGM throwing them out. Options 2 and 3 both look to me like throwing oil on troubled water. Fine, except if the tanker is on fire then it's likely to go horribly wrong ... From BG's point of view option 3 is best because it will either enable him to get out, or it will increase his hold - option 2 is not a good idea because it will weaken the company more than support the share price.

Frankly, any belief that MS can survive a market shift against it, based on its large cash pile, is (thankfully) living in cloud cuckoo land. If Wall Street thinks the software market has turned against MS, then MS will have two choices - get out, or let the wolves tear it to bits. MS's value to a Wall Street Wolf is all that will support the share price should their revenues collapse, and with a Net Asset Value of maybe $100Bn, that's just chicken fee to a wolf pack. Bye-bye MS - it was nice knowing you. NOT!

Cheers,
Wol

Gut feeling ...

Posted Jun 19, 2004 6:58 UTC (Sat) by ecureuil (subscriber, #3507) [Link]

My gut feeling is that this particular case is one of using Free Software as a negotiating tactic to win pricing and licensing concessions by Microsoft

The Home Department (Ministère de l'intérieur) and the Finance Ministry are in the process of moving from Microsoft Office to Openoffice on Windows. It is still not Linux on the Desktop but a big step towards it.

It is two of the largest ministries in France. So there is a real desire to break from Microsoft, desire that is fuelled by the strong anti-American feeling that is prevalent in Europe nowadays.

Microsoft has never made any effort to look different than an American company. It is a strategical blunder in a globalized world. IBM is much smarter, a true multinational, using local partners. People associate Bush with Balmer. They don't even know who is the boss of IBM.