Microsoft in Peru, Living Room

Two pieces of Microsoft news today. tfofurn writes "According to this AP quickie and this Reuters story, both on Yahoo, Microsoft is donating 'about $550,000 in money, software and consulting services to the Peruvian government for educational and "e-government" initiatives' to Peru. The AP story mentions the conflict of this with Edgar Villanueva's proposal to have the government use only open source software. Villanueva (/. interview), you may recall, wrote a famous letter to MS Peru a few months ago." And many people have submitted stories about Windows XP Media Center, coming this winter to a living room near you.

Comments

Will everybody do the same?

[jmv]

It seems like MS is sending the message: "If you want to have 'free' MS software, say you're going Linux". Wonder how many organizations/countries without any intent to switch to Linux (will) have "Linux programs" just for negotiating with MS?

Re:Will everybody do the same?

[Malor]

Sure, but this is only a temporary gambit. Once you're hooked on Microsoft, getting yourself off it is terribly painful and difficult.

This is not a gift. It is a free sample from a drug dealer.

Consider... even if lots of countries start talking about Linux every time they want free software from Microsoft, there will eventually come a time when Microsoft will just chuckle and tell them to go right ahead. By then, they'll have built enough 'issues' into interoperability with free software that it will be difficult to make it work without totally ripping out the existing infrastructure... and very, very few politicians will have the guts to put their governments through that kind of pain.

I hope that Peru has enough foresight to ignore this 'gift'. Mr. Villaneuva shows extraordinary intelligence in his analysis of free software, which gives me hope that they may indeed see the iron fist under the velvet glove.

Re:Will everybody do the same?

[Jason Earl]

During Christmas time it is a fairly common practice (or it used to be when I lived in Peru) for the police to simply pull over motorists and demand money. Bribes are very commonplace in Peru any time of the year, but during Christmas the police stop even pretending to be upholding the law. They have got guns and you don't, and their children need Christmas presents and Paneton.

Lima is a city of something like 7 million people and this "donation" is supposed to help something like 20,000 students (a pittance). My guess is that it ends up helping far fewer students than that, and all of the help will likely go to the rich private schools that the politicos send their children too.

Unfortunately it is impossible to do business in Peru without bribery. I am just surprised that Bill Gates himself is delivering the money. When I first heard that Peru was looking at Free Software legislation I was very skeptical. There are lots of good people in Peru, and I don't doubt that Dr. Villanueva is an honest man and a patriot, but honest Peruvian officials are few and far between.

Re:Will everybody do the same?

[einer]

And if you were a company 100% on Linux or some other Unix flavor, you think switching to MS would not be "terribly painful and difficult".

Well, uhm... No. At least, not AS difficult. You see, Linux uses well defined standards and file formats instead of proprietary, constantly changing ones.

If it works, and does what they want it to do, why switch?

The business case for switching isn't JUST saving money. It's weening yourself off of said proprietary formats. Being locked in to a certain format might not be expensive RIGHT NOW, but using open formats means that it will never be any more expensive.

Re:Will everybody do the same?

[GSloop]

How about MS Word, Access, Excel and Powerpoint?

How about how Word 95 can't open any Word 97 docs. (Before you say, everyone does this... what was the necessity for this. If the upgrade was dramatically diferent, and it wasn't possible to use the same format, I might go easy - in this case, it seems really hard to make that argument.)

How about Access 97 vs 2000...

How about MS SQL Server, and your "special" extensions to SQL.

How about Active X, C#, HTML that only works on IE.

How about Kerberos?

How about breaking the OS/2 3.X compatibility mode every time they did virtually anything to Windows.

How about the totally bogus error messages you got in the beta versions of Windows 3.x when you were using DR Dos?

(Some of these are not propriatary file formats, but clearly demonstrate the capability and willingness to use despicable acts to maintain their power - and keep you by the short hairs.)

MS probably has one of the worst records of ANY company in the history of the computer industry. Locking you into a specific "hamster wheel" is their specialty.

If you like being MS's "hamster" go ahead. Many of the rest of us don't really care for it. For many reasons, money out of our pocket being one of them.

Cheers!

Re:Cool

[NotAnotherReboot]

actually- you don't own it, microsoft just 'licenses it to you'. selling it would be unamerican and go against everything our ideals stand for.

Ahh, I see.

[sllort]

Peru: We've decided to use Free Software.
Microsoft: Ok, here's some free Software.

Re:Ahh, I see.

[ReelOddeeo]

Peru: We've decided to check into a drug rehab center.
MS: Here, have some more drugs -- for free.

Take it and run

[CrazyDwarf]

I say Peru go along with only using Open Source software, but keep Bill's gifts anyway. I don't see anything in the article about them being obligated in any way to use the stuff for a particular purpose, and I'd like to see him go into Peruvian court and try to sue to get it back.

Re:Take it and run

[gosand]

I say Peru go along with only using Open Source software, but keep Bill's gifts anyway.

RTFA.

"Peru's President Alejandro Toledo was at Microsoft Corp. headquarters on Monday, where he signed a deal to put the Internet into the Andean nation's schools and modernize its government."

The key phrase here is "signed a deal". Not that I wouldn't love to see them sell off all the software on eBay to fund their Open Source initiative.

You won't be able to sell it

[yerricde]

then they'll send me a bunch of free software

The only "free software" that Microsoft distributes is the GPL'd components of Interix, MS's competitor to Red Hat's Cygwin. I'll assume that by "free software" you mean "royalty-free licenses for Microsoft software".

which I can then resell on Ebay.

I don't think so. Microsoft would be more likely to give you a free, non-transferable license to use the software. Given the outcome the last time Microsoft products were offered on eBay, Microsoft Licensing isn't as naive as some Slashdot readers would think.

Its Basic Economics...

[FortKnox]

Let me tell you all the horrors of a capitalistic economy.

I own a lemonade stand that sells $5 lemonade. I have about 50 customers every 2 hours, giving me a nice customer base.
You see how I'm gouging people, so you open a lemonade stand for $1, and attempt to show people how to make lemonade at home for under $1.

I'll see what you are doing, and sell my lemonade for $0.50, which is less than it takes for you to make lemonade. For you to compete is for you to lose money. I can afford it, because I have capital sitting in a bank account. You go out of business, and I raise my price back to $5.

This is what MS is doing!

Its basic economics, people.
Now, don't give me the "linux is free" angle. Use the anology, but instead of money, use familiarity with the product, and the popularity with MS products vs open source ones.

Re:Its Basic Economics...

[Dr_LHA]

I'll see what you are doing, and sell my lemonade for $0.50, which is less than it takes for you to make lemonade. For you to compete is for you to lose money. I can afford it, because I have capital sitting in a bank account. You go out of business, and I raise my price back to $5.

This is what MS is doing!

And this is why they will utimately fail against Linux. Because no matter what they do, because Linux is not owned by a particular company, because it's free and GPL'd, it will always be there as a competitor. This is what scares MS the most - they can't buy out Linux or bankrupt it.

Re:Its Basic Economics...

[BrookHarty]

And this is why they will ultimately fail against Linux....

How about.

School wants to save money and Install Linux.
Microsoft donates computers/software (for free) and onsite configuration. School saves money.
Year later, contract is up, Microsoft wants to charge for new licenses. They want upgrades fees for new OS for every computer. They also want upgrade fees on m$ office updates, server software, database, etc...

Now repeat that on a whole school district, where everything is now M$ based, and the costs to change everything away from M$ would be too great of a cost.

Americans have a problem looking 1+ years in the future, they dont see the BRICK WALL. We seem to be a "Show me NOW" culture. We need to have our state and federal governments use open source software NOW. (There's the culture buzz word)

This tactic is not new...

[malakai]

It's no different then scheduling the MS Sales Reps to come in for their 1hr long presentation, 45mins after you schedule the Oracle guys to come in for their presentation.

The two end up meeting in the hall, and notice each-other. Within literally hours you get phone calls and email saying to the extent "We really want your business, and well beat anything they offered".

Linux has to be prepared for this. Don't expect companies to back down from Linux competition simply because Linux is free. And don't expect companies not to use Linux as a expendable pawn in negotiations for better rates from existing vendors.

This is after all, how the free market works.

-malakai

Freedom

[Subcarrier]

Regardless, I said I was switching to Linux and never got a dime.

And I said unto Linus: "Grant me a boon or never again shall I touch Linux! I will rather take my fortunes with the Prince of Evil!"

And thus spake Linus: "Thou hast the option to do so, for I have given thee freedom."

And, overcome by happiness, I sank unto my knees and cried: "Never again shall I doubt thee, for I am indeed free!"

saw it coming

[Dr. Awktagon]

Ah I wish I could find the earlier comment were I said this is exactly what would happen in Peru. Well, no matter, this the usual Microsoft tactic. It worked in Mexico, now Peru. Will it work in Norway, a wealthier nation?

Must be nice to be able to print your own money like that: here's 1,000 CD copies of MS Foobar Pro, each worth $5,000 !! So we just made a donation of $5,000,000 and it's tax deductible (not that we pay taxes). And they'll still have to pay for upgrades. Beautiful! Let's see Open Source beat that!!

Re:saw it coming

[wfrp01]

here's 1,000 CD copies of MS Foobar Pro, each worth $5,000 !! So we just made a donation of $5,000,000 and it's tax deductible (not that we pay taxes)

That's a good point. Who's calculating the value of this donation? Microsoft. Based on what? The retail shelf price?

Donations should be valued according to what it costs the vendor to provide them. Peru is not giving MS upteen million dollars. MS is not providing Peru with software that they could have sold somewhere else. They are simply printing money.

Since congress is so hot-to-trot about corporate oversight these days, maybe they should take a closer look at this particular form of bullshit accounting.

Re:saw it coming

[jsac]

[H]ere's 1,000 CD copies of MS Foobar Pro, each worth $5,000 !! So we just made a donation of $5,000,000 and it's tax deductible (not that we pay taxes)

Open Source can beat this, using the same bullshit accounting. Just donate 1,000 CD copies of Mandrake Peruvian Gold Edition -- market price, whatever you want it to be.

Re:$550,000 in software...

[captain_craptacular]

Thats very true. It's not like other manufactured products where it actually costs a company money to make each individual copy. I.E. if Ford donates a car there was actual cost involved in making that car above and beyond R&D. Whereas when MSFT donates 10,000 copies of office, there is no real cost involved as I'm quite sure the R&D for office is paid for. The real cost to them is actually very nearly nothing, not even boxes and CD's because they probably give them like 10 cd's and 10 manuals and 10,000 liscences.

Cost of Linux now measured in the negative?

[sterno]

It would seem that the cost of Linux is no longer zero. Instead it is effectively negative because in order to compete with it, it seems, Microsoft has to give organizations a bunch of incentives. It says something that in order to create a reasonable value proposition for their software they have to, not just give it away, but actually pay people to take it.

So the question for organizations now is, is it worth the upfront money Microsoft gives you to possibly be hooked into their products in the long run. Certainly you can use a possible linux move as leverage against MS prices, but in the end, is it better to use the leverage or to take Linux.

You have to presume that Microsoft has a plan of how they intend to make back this money in the long run. I can guarantee you that they aren't cutting half billion dollar checks at a whim without thorough belief that they'll make up for it. I'm sure that 5 years down the road Microsoft will be coming around to collect on those incentives. They'll collect by increasing licensing fees, further invading privacy, etc.

CEO (Chief Evil Officer)

[Tetsujin28]

Bill Gates is desperate to keep Peru on his side, so he can finish his high-tech mountain stronghold lair high in the Andes. He's still jealous of Dr. Evil's hollow volcano.

Re:Yeah but...

[pi radians]

Okay, I'll bite.

So what if your $5 lemonade is awful? It gets sour quickly and has a terrible aftertaste. A few times you buy this lemonade and the glass you got it in has a hole in it and your lemonade spills out. Since this $5 lemonade company has removed all other competition through "hard work" and now demandes that instead of charging for every glass, now you are charged for every sip you take.

Not only that, but in the future this $5 lemonade company won't let you but anything else except for their lemonade in that glass. So your stuck, paying for every sip of lemonade and then being forced to drink more and therefore buying more.

Yeah, that great. Because this lemonade (with that extra sugar that you can't remove from it) has given you cavities. And since you live in a non-socialist country that allowed the lemonade maker to thrive no matter how corrupt their practices are they have destroyed all other alternatives. By now they also own the water stand and are probably your dentist.

So thumbs up to you dude. Great insight on it all.

Escalation - A chronlogy of events

[Cinabrium]

I'm not currently authorized to reveal my sources, but have some first hand information about the events surrounding Peru/MS case that could help to clarify things a little bit. The process of countering Dr. Villanueva's bill had several escalation steps; some of them saw the light, and some others didn't. I guess it's time to tell what I know.

1. Dec 14 2001 - Dr. Villanueva introduces the Bill.
2. Mar 06 2002 - Public Forum in the House of Congress (attendance > 500), chaired by the President of the Congress.
3. Mar 08 2002 - Universidad Nacional de Tumbes, a public university in Northwestern Peru, communicate their official support to the bill.
4. Mar 19 2002 - First counterattack: the Peruvian Software Producers Association (APESOFT)'s Chairman objections to the proposed Bill in "Gestion", a local newspaper.
5. Mar 20 2002 - Reply by Dr. Villanueva, in the same newspaper
6. Mar 25 2002 - Second counterattack - The now infamous letter of MS-Peru's General Manager to Dr. Villanueva
7. Apr 08 2002 - The well known reply of Dr. Villanueva
8. May 20 2002 - Universidad Nacional de Ingenieria (second largest public university in Peru, specialized in engineering and science) gives official support to the Bill.
9. May 27 2002 - Third counterattack - The American Chamber of Commerce of Peru (AmCham) sends a letter to the President of the Congress, opposing the bill. Same arguments as MS ones, plus some diplomatic threats as "...negative signals to private investments..." and Godzilla will eat our children.
10. Jun 07 2002 - Dr. Villanueva replies AmCham's letter.
11. Jun ?? 2002 - Fourth counterattack - Conversations, informal talks and "occasional meetings" of U.S. Ambassador Hamilton wih several high-ranked Peruvian officials, reminding them the dangers of approving the Bill.
12. Jun 11 2002 - Fifth counterattack - Letter from the Prime Minister, enclosing a memo of the head of the e-government project objectioning the bill. Same arguments as MS ones, plus "...negative impact in the process of renewing the APTA (Andean Trade Preference Agreement", plus the usual seven plagues of Egypt. Mr. Bermudez, the e-government guy, is known as being closely related to MS. Mr. Dañino, the former Prime Minister, is a lawyer whose law firm has MS-Peru as one of its most prominent clients
13. Jun 25 2002 - Universidad Nacional Mayor de San Marcos (the largest public university in Peru and the oldest in America [est. 1551]) gives official support to the Bill.
14. Jul 15 2002 - Sixth Counterattack - President Toledo's pilgrimage to Seattle, to receive the 30 coins (or less) from the hands of Mr. Gates

Except Mr. Hamilton's talkings, which were not recorded AFAIK, there is written evidence of all the facts stated above.

In addition, let me point out that, if Microsoft is pricing its consulting services at the same rate it did for their agreement with the Chilean Ministry of Education, the $550K "donation" means just 5000 person/hours of consulting.