Unite and form a band of brothers against Microsoft

Many firms in the UK are dependent on Microsoft as their software supplier, but how was this situation created and who is to...

Many firms in the UK are dependent on Microsoft as their software supplier, but how was this situation created and who is to blame? Why did Microsoft propose its licensing changes, and why do its users feel that they have not been properly informed of their options? More importantly, why are organisations in the UK negotiating licences with Microsoft separately instead of negotiating from a united front?

What do you think of the Microsoft licensing changes? Is it going to cost you more, or less? Do you even understand how to work out the cost?

The events of the past few months have identified a number of issues relating to our dependence upon the Microsoft Windows and Office product set.

Perhaps the most important is the issue of monopoly powers. A monopoly is defined in the Collins English Dictionary as "exclusive control of the market supply of a product or service".

As there are competing products (Linux, Unix, Staroffice, Wordperfect) presumably Microsoft cannot be a monopoly. However, this definition may no longer be adequate.

If your applications are written to run on Windows and to use Office then the conversion costs could be very high. These costs are not simply the new software costs, but also the coding and testing of the converted applications. Costs continue to rise as you consider the disruption as your users are retrained to use the new products.

Does this situation constitute a form of monopoly because the exit cost from a product set is too high for an organisation to contemplate?

How did we get into this dependency on Microsoft with its high exit cost?

In the 1980s we were all trying to escape the perceived dominance of IBM by using lower cost minicomputers running Unix. For a while that was acceptable, but then each hardware manufacturer started to modify Unix to allegedly provide useful features. Unfortunately, a side effect of this was to lock your applications into the variant of Unix that would only run on that hardware. This evolution of disparate Unix's and the lock-in they enforced actually created the marketplace for Microsoft.

The lower cost IBM PC-compatible box with its Intel architecture running the Windows client (and server) operating system meant that we could pick and choose our hardware suppliers. Fifteen or so years later 99% of the corporate world is locked into that "cheap" Wintel product set.

The sheer scale of the expansion of the PC population doesn't help. People want a PC because it makes them more cost effective, but the number of PCs installed in corporates grows exponentially so that even a cheap PC multiplied by the number in an organisation means that high levels of expenditure are required.

From the perspective of Microsoft, the past decade has been one of constant expansion as it has reaped the benefits of the resistance to IBM dominance, the fragmentation of the Unix marketplace and the low-cost ubiquitous Intel PC.

However, we may now finally have hit saturation level and the days of unconstrained customer growth may have ended. In this new environment, primarily driven by replacement sales, suppliers have to adopt different strategies to fund any ongoing development costs. This is the situation that eventually has to be faced by all innovative and pioneering organisations.

In the case of Microsoft we can see attempts to penetrate new markets - in the consumer marketplace with such things as xBox and in the corporate market place with .net, which in itself will drive new licensing paradigms.

However, Microsoft has recently invested a large amount of development cost into new versions of both Windows and Office and now faces the problem of achieving a return on that expenditure. It is a strange coincidence that the proposed licensing changes seem to be occurring at the same time that reports of lower than expected take-ups of Windows/Office 2000 are circulating.

The second issue is communication. How did you hear about the changes? My understanding of the timetable is that Microsoft was briefing the distribution channel in May, but it didn't reach my ears until August. Then we had to try to work out what it meant. No easy feat - and my situation is a fairly simple one. Of course, we haven't been given the other information we need, which is the "road map" of likely product introductions over the next three years and the consequent withdrawal of support for older versions. Understanding the various options for licensing is difficult enough; making an informed decision without the road map is impossible.

I get plenty of mailshots from Microsoft on trivia such as road-shows but I didn't receive any on the significant licensing changes that were being announced. Could it be that the customer is being taken for granted?

The third issue is in the cost discrepancies that are being highlighted. Microsoft has stated publicly that the proposed changes are deemed to be revenue neutral. However, many organisations have performed calculations that show this is anything but true. The Society of Information Technology Management (Socitm) has stated publicly that the cost to its membership will be about £80m a year.

Apparently Microsoft is now negotiating directly with Socitm, which seems to be an implicit acceptance that Socitm was right. The NHS has just completed a separate negotiation with Microsoft. I understand that The Infrastructure Forum (Tif) is now in discussions with Microsoft. Maybe paranoia is striking but I can't help feeling that we are being picked off one by one. Maybe we should all band together and ask Microsoft to negotiate with UK plc?

The fourth and final issue surrounds the way the changes to the timetable were announced.

Remember the deadline of 30 September that we all effectively had to decide by - the one that was revoked on 8 October? What about those companies that decided on 30 September because they thought they had no other option?

I represent one of those companies and I have still received no communication from Microsoft advising me that the rules have changed and that I may be able to re-consider my decision.

Microsoft certainly created an issue that caused three user organisations to try jointly to bring pressure to bear. Whether the Elite, the Insititute for the Management of Information Systems, and Socitm joint approach did influence the decision to delay the timetable is something we will probably never know, but I am convinced that we elevated the argument and focused some attention on what was going on.

The lesson to learn from this whole saga is that if we are faced with a monopoly supplier then we have to face up to it together and not let it pick us off one by one which, unfortunately, is what now appears to be happening.

We may have won a battle but we have certainly lost this war.

David Rippon is chairman of the IT Directors Forum


Elite@hq.bcs.org.uk

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