Microsoft Seen As Offering Heavy Hand To Oregon Schools System
Microsoft's business model is dependent, in part, on an ever-increasing revenue stream. This is in part due to the way it leverages stock options to subsidize its labor costs. For this you need an ever-rising stock, or you lose employees, and for an ever-rising stock, you need an ever-increasing revenue stream. The problem is, where do you go in a maturing industry where you already have 80-90% of the market all wrapped up in big fat gold Monopoly notes? You look to your current customers for more money.
For instance, you can try and dupe your customers into renting your software by the year instead of "buying" it. Microsoft is experimenting with this in Australia and New Zealand, much to the dismay of Microsoft customers in those countries. Microsoft has already forced one Australian charity that was seeking to place donated computers in the hands of low-income kids out of business. They wanted that charity to pay for new software licenses on the 486 and Pentium (I) computers it was doling out. Class act, that was.
You can also re-jigger mass-licensing agreements to your biggest customers, specifically corporate and education buyers. The goal is to get your customers to pay every year or two, whether or not they need to, thereby making your revenue stream more dependable. An article published in yesterday's The Oregonian talks about one such effort under way right now by Microsoft.
The article goes on to talk about how the schools are considering Linux, and how a couple of Linux user groups have offered to wipe all of the donated computers in the district, and put Linux on them. Read the article, it will make you nice and tense, but it's a good read.
I have said this before, but Microsoft is out of touch with reality. The company has lost site of the fact that its job is to provide compelling products that entice its customers to give the company money in exchange for goods and services. Instead, Microsoft looks for ways to compel its customer to give them more money whether or not it has earned it.
The piece quoted above makes a convincing argument for the idea that Microsoft is trying to use the "random" audits to bully schools into signing on to a system where they have to pay the company money, even for the Macs on hand, as well as any computers running Linux! Note that the random audits were conveniently sent to all of the largest school districts in Oregon and Washington:
Since when are audits handled by the marketing arm of a company? That actually may be standard practice, but if it doesn't scream conflict of interest, I don't know what does. The schools, corporations, and other large institutions have no one but themselves to blame for that, however, as they signed the contracts that allowed for those terms to begin with.
Make no mistake about it, Microsoft is using these sorts of bully-tactics to not only increase its revenues, freeing themselves of the need to make compelling products in the process, it is also leveraging its own power to further that power. Think about it from a school's point of view: "I have to pay US$42 for every computer I have? Well, we might as well put Microsoft's software on it, since we have to pay for it anyway." How the people in charge of this practice in Redmond can sleep at night is beyond me.
Sure, it's a discounted price at US$42 per machine, but it's a fundamentally wrong approach to business as far as ethics and morals are concerned (no doubt there are people lining up to point out that ethics and morals have no part in capitalism, but that's a topic for another editorial). It's also the same sort of treatment the company gave to OEMs that helped land them in trouble with the DoJ to begin with. Microsoft charged PC clone makers a fee for each computer sold, whether or not it had Windows on it. Stopping that vile practice was a side effect of the antitrust trial, but here the company is doing it again. Of course, now there is a Microsoft-friendly administration in power that "prefers innovation to litigation." It will be up to the schools and corporations to "Just Say No to Microsoft" when the company comes calling with these sorts of contracts in hand.
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