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Microsoft's Software Philanthropy: The Goodwill Ploy
bethanie writes "The New York Times has printed a story concerning Microsoft's plans to 'significantly increase its donation of software to the nation's nonprofit organizations, to a level that may approach $1 billion annually in the next three to four years. ...But the increase has also drawn objections from developers of 'open source' programs (programs for which the source code is freely distributed). Those critics say they believe Microsoft is using a giveaway strategy to undercut the so-called free software movement in the potentially promising nonprofit market.' What do you think? Is it true philanthropy or just another tactic to assimilate everyone into the MS collective?"
When you're one of the richest companies on the planet, "philanthropy" always has an aim.
Never argue with an idiot, he'll just lower you to his level and beat you with experience.
"The first one's free"
If you can't see the value in jet powered ants you should turn in your nerd card. - Dunbal (464142)
...how "free" undercuts "free"?
When both prices are nil, what's left to compare but individual merit and the availability of technical support?
The coolest voice ever.
Of course, if the scuttlebutt is that MS uses other loopholes to dodge all its taxes are true, then it's a moot point.
Call (206) 338-5780 COLLECT for information about a genuine BA, BS, MA, MS, MBA, or Ph.D.
But to be honest if Microsoft didn't give away the money, people would be crying and moaning about that.
As much as we all hate the evil empire, for them it's damned if they do, and damned if they don't.
Look at it this way, the money is going to worthwhile causes, be happy it's doing someone other than a rich investor, or evil Bill himself, some good.
Mike
They're going after markets that don't have much money in the first place. They realize internally, though would never admit, that giving away software to people who wouldn't buy it otherwise doesn't cost them money. Externally, they'll say how they're doing such good things, and say how "We gave away a billion dollars in software last year.", but that wasn't a billion dollars that they could have had otherwise.
This is basically the same as the RIAA giving me a bunch of MP3 files of music I wouldn't have bought anyhow and claiming they gave me a thousand dollars of music.
Or like me saying I have a baseball card that's worth $100,000. It's only worth that if someone will buy it. If no one will buy it, then it's a piece of cardboard with a picture on it.
The moral of the story is that they're giving away something that costs them nothing to a market group that wouldn't have bought their stuff otherwise, and keeping Free software out.
"Most European technology just isn't worth our stealing," -- Former CIA chief James Woolsey, referring to Echelon
Did somebody forget to proofread this article before posting? That makes no sense - how in the fuck can you undercut a free product? How is such a market "promising" if no sales are made? How is there even what could be called a "market" for something that is free? Doesn't one have to buy or sell in a market?
I think the Free Software people are just jealous because Microsoft, too, figured out that giving away their software for free is a good idea. God, it's like you people want to see non-profits be deprived of choices or special benefits in the market. Truly the mark of a zealot - you people were probably the same people who wanted to see Skylarov kept in prison so he could be the test case for your DMCA challange.
--sdem
I have always wondered if seeding an OS out in the world really helps business all that much. I agree that it makes common sense; however, I have never seen the proof.
For example, Apple flooded the school systems 15 years ago with pretty good little systems. They were used to teach typing, accounting, and basic computer skills... What did all that effort earn Apple?
Not much in my opinion. Maybe it always works... maybe the Apple episode is the exception.
Risking Karma here... I am predominately a windows user; however, I cheer for linux as much as humanly possible. I think the competition is wonderful for the consumer and the market.
Davak
While at some level it is possible that Microsoft will be donating "value" to the organizations involved, the value has nothing to do with the actual cost of the software.
As far as the packaged software is concerned, a copy of Windows (any version) Office (any version) or any other piece of software Microsoft donates to charity, the cost is the raw material involved in the package, and the cost of duplication for the content. Also by donating copies of software packages to charity, they bring down the total cost of production per unit.
The 1 Billion dollar value, per year, is far more likely to be related to the MSRP price Microsoft puts on the product, than on the material cost.
While I am sure that a part of this has to do with Microsoft doing just about anything in it's power to undercut it's competition, (which does include Open Source Software these days) it is also potentially valuable to them in that so far the company has been able to escape taxes in a number of ways. This provides another way for them to write off proffits that they would otherwise have to claim when it came time to file State and Federal taxes.
Perhaps of more concern is the fact that by using these applications, charities are going to be locking themselves into a proprietary set of file formats that they may not later be able to extract information from without Microsoft's blessings.
Then again, that's just my opinion. I have been wrong before, it will probably happen again.
-Rusty
You never know...
More than Both. If they can get:
1. Tax credit
2. Press (preferably good press)
3. Good will of the charities.
4. Make themselves feel like good giving citizens
5. AND keep Open Source from gaining mindshare
They win all the way around, and without costing them a dime. I mean really. Charities can't afford 200 dollar Operating Systems and 3 or 400 dollar Office Suites, let alone the people who know how to maintain it.
Which brings a potential 6th benefit for MS:
What if it crashes and these charites don't know how to reactivate it? Uh-oh, they might end up having to go out and BUY a new copy! Meaning more profit for Microsoft.
I believe microsoft has sufficiently demonstrated to the people that it now has the political prowess to thwart any legal challenge to how it uses its monopoly. What was it the Bush administration was saying after the newly manned justice department quickly settled the suit? Something like they didn't see why the government was bringing microsoft to trial in the first place? I'm sure somebody has the article stashed away somewhere.
After being found guilty of illegally using their monopoly, they were told to pay a penalty that is less than 10% of what they made breaking the law. If the penalty for stealing $100 is paying a $10 fine, why on earth would you stop stealing $100?
Education is a better safeguard of liberty than a standing army.
Edward Everett (1794 - 1865)
They'll be forced into an upgrade cycle. They'll be forced to buy all the little extras it takes to bring MS systems up to level with other systems. And so on. A big donation looks nice and free to the clueless, but once you get into what else you need to actually get work done, the price of the OS and basic software (heck, even just Office) isn't even close to your total cost.
assimilate everyone into the MS collective ?
You post your story on Slashdot, so why do you have to ask ?
Yes, everybody knows Microsoft is evil, wants to take over the world, and that Bill Gates wants to stick fireants in Linus' and RMS' underwears.
Yes, everybody hates Microsoft, that Windows users are all stupid, that Linuxers have discovered the Virtuous Path.
Yes we know that Microsoft pulls the SCO puppet strings, that they make evil deals with the MPAA and RIAA.
Yes, we know all that by now, Slashdot crew. Can we move along now ? why do we have to read the same Microsoft articles with world-domination overtones over and over again ?
"A door is what a dog is perpetually on the wrong side of" - Ogden Nash
As for wondering whether Microsoft is doing this for philanthropic reasons - the simple answer is "of course not". If I was a Microsoft shareholder, I would want to sack any Microsoft board of directors that used the company's resources for anything other than increasing the bottom-line.
Microsoft isn't giving away money, it's giving these charities a limited number of free licenses for its software.
No doubt, this donated software has strings attached, just as similar Microsoft donation have had in the past. Only last year, on this very website, I remember reading about the company "donating" copies of Office to a charity in a poverty-ridden African nation on the condition that the same number of copies of Windows were bought to run it on.* And I can recall other examples before that one too.
Almost without exception, Microsoft's donations are targetted to meet Microsoft's long-term goals. A few licenses here, a few there buys Microsoft lots of positive PR ("hey, look at how nice we are to the little kiddies") but anyone who thinks that the company's motives are purely philanthropic is living in cloud-cockoo land.
Microsoft is a company that has billions in the bank. The amount of good it could do with even a fraction of that wealth is unimaginable. Calling the giving away of its own software charity is a joke. Using some of its significant cash reserves to wipe out a large chunk of Third-World debt - now that would be real charity.
(*It seemed to be oblivious to the relevant marketing/public affairs people at Microsoft that a cash-strapped charity in a Third-World country didn't have the kind of resources to afford one copy of Windows to install on the recycled machines that it had luckily procured, let alone ten or twenty. Sometimes, people who think nothing of paying $2 for a cup of coffee seem to be really thick when it comes to visualising how the other half lives.)
"Accept that some days you are the pigeon, and some days you are the statue." - David Brent, Wernham Hogg
Uhhm, no they couldn't. They didn't have that billion dollars in the first place. This is the point the parent post was making but it obviously went right over your head. Non-profit orgs can't spend the money on software. Microsoft can't charge them for software. But giving away the software actually benefits Microsoft.
___
If you think big enough, you'll never have to do it.
Last October, /. had an article on the topic. This described a fairly blatant case of "donating" a lot of software that couldn't run on the schools' computers unless the schools paid for expensive upgrades. The cost of the upgraded would have been much more than the claimed (i.e., retail) "value" of the donated software.
This is an old ruse. Before Microsoft, IBM used similar "gifts" to both tie schools into IBM hardware and make them pay for upgrades that the schools wouldn't have bought otherwise.
It's called "marketing".
Keeping the competition out is just part of it. Giving away freebies that require the mark to then buy something even more expensive is an old technique that long predates the existence of computers. When you buy a cheap laser or bubble-jet printer that then requires expensive ink cartridges every month, you are falling for the same tactic.
Those who do study history are doomed to stand helplessly by while everyone else repeats it.
Do I doubt the motives of their largesse? Not really... they're pretty clear. But what are we trying to accomplish, here? In criticizing this, the (free|open source) software world simply looks bad.
Generally, society tends to be happy enough when charitable contributions are made; scrutinizing the donors for their motives is just puritannical. If non-profits benefit, according to their own definition of 'benefit', that's good. Complaining about it allows writers to lead articles with lines like "Even when the Microsoft Corporation attempts to do good, its critics distrust its motives," and discount open source people as too partisan to be taken seriously. "Michelle Murrain, a member of the Nonprofit Open Source Initiative in Amherst, Mass., says that if Microsoft gives away Windows for a few years, nonprofit groups may be less likely to use free, open-source software." Great. We're complaining about charity because it doesn't benefit us.
On top of which, none of the arguments put forth are particularly convincing. Murrain says, "Microsoft could throw in all this software for the next two years and then just stop and people will be hooked." Hooked. Okay. As if none of these people had used Windows before. Or as if companies with tight budgets will, in two years' time, be willing to cough up more than they are now, because they've become hopeless Microsoft junkies in the interim.
And Michael Gilbert says, "As a monopoly, Microsoft's below-market-price distribution of software might very well be a form of illegal competition for a particular market." Presumably he's indulging in a bit of theoretical speculation, and doesn't really lack the sense to foresee such a legal claim promptly going down in a ball of flames.
Sometimes it seems that open source people aren't satisfied with the prospect of beating Microsoft... they're offended that Microsoft isn't willing to simply roll over and die. Or at least to provide a stationary target. Better to pick our battles, and keep the focus on all the good software being developed except when there's really something to complain about.
"The best we can hope for concerning the people at large is that they be properly armed." - Alexander Hamilton
I work for a non-profit org that was, in its startup, bankrolled by Microsoft (and some others) in a very, very big way. What I can tell you is that our relationship with Microsoft is currently fluid (as they are nearing the end of their promised obligation to us). So the org I work for is a non-profit that deal specifically with technology in the non-profit sector. I am in a unique position, I get to see many intertesting interactions. But the one that impacts me the most is that, in many cases, the free software that orgs get from Microsoft and other corporate donors is often the only software they can get, and in many cases, the best for their needs. The main need here, which the technology community and most slashdotters don't consider, is that non-profits are not only on the ropes in terms of the technology they have, but supporting and maintaining that technology is a huge problem too. If you want to see a better presence for open source in the non profit community, you need to support nonprofdits with free or extremely cheap support and training on open source solutions. non-profit professionals, like most non-techs, dont want to be technology experts. they are busy feeding people, helping them get off of drugs, and rebuilding the faces of little kids with deformities. take it from me, this is what i do for a living
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RKauffman s.e.c.r.e.t.m.e.d.i.a.g.r.o.u.p
Corporations are designed to do one thing, and one thing only: to increase the value of its stock. Only the naive believe that corporations are designed or operate to turn a profit, contribute anything useful to any community, "philanthropize", or anything else. These are solely a means to an end.
The value of a corporation's stock is determined by the demand for that stock (classic supply/demand relationship). This is accomplished by convincing investors that the stock has value (the perception of value is value). This is done by increasing net assets (i.e. improving the balance sheet), paying dividends, etc. etc. One way of doing it is to create the impresion that there is an intangible value in the company; i.e. provide a "return" to the community that some investors might consider valueable and worthy of their support. This explains how corporations can be philanthropic and still be acting in the best interests of the shareholders. (Ignoring the effects of good PR on sales, possible gov't regulation, and other market/operating environment considerations)
Absolutely everything that a corporation does is designed to increase the value of its stock. Anything else would be in violation of the duty of the officers of the company to its shareholders.
It is an error to think about corporations with the same "mental template" that you use to thing about people; they do not "think" in the same way; rather, corporations "think" more like simpler forms of life; almost like a program (really, like a program with the introduced factor of human error). A corporation being philanthropic is less like a person being philanthropic, more like those ants that keep and feed aphids for food.
Bottom line: Corporations give gifts, not out of concience, or goodwill, but from a perception of self benefit of some sort.
Some companies operate entirely to maximize the implicit derived from philanthropy, such as charities that are organized as corps, etc.
This is why corporations act without conscience. You think that environmentally friendly companies are so because they care about the environment? Yeah, right. They act that way for legal, PR, or other reasons (but they will sure as hell claim to care, for the very same reasons).
Granted, my attitude about corps is very, um, clinical (?); and granted, this holds true less for smaller companies, or, more correctly, companies that are controlled more by their own stockholders (i.e. the mom and pop shop where the shareholders are, in fact, the officers of the company), because in this situation, their duties are to themselves, so they can operate in a fashion that they deem to have the most value.
But I think you will find that the stark portrayal of companies is more accurate than most would like to believe when describing large, especially publicly traded companies.
My point is, given a proper understanding of how corporations operate; the question of "Are company A's actions philanthropy, or self-promoting" is really a question without meaning; It's like asking if the ocean is full of water, or is it full of dihydrogen oxide?"; the question arises from a misunderstanding of the definition of "philanthropy" in the context of corporate operations.
It's even worse than that. They're essentially getting to pay the $10 in gift certificates to be used to buy their own products, whose marginal cost is nearly nil. So in reality they're paying more like $.20 for the $100, in a way that amounts to an investment in their own future market share.
This whole fiasco is absolutely proving me right on this one - I've said all along that expecting the government to reign in microsoft was naïve at best. Fox, hen house...
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Friends don't let friends enable ecmascript.
I think the question should really be "Does it matter?" I can't speak for anyone else who uses Free/Open Source Software, but I did not start using it just to "kill Microsoft."
/. and complain that the Big Bad Evil Empire(tm) is being sneaky.
Now, I'm no big fan of MS, but even if they give everything they make away for free for the next 10 years (which I believe they have the cash on hand to do...), I will not trade in my Linux box. I believe the Bazaar model will win, in time, not because it is cheaper, or trendy, but because it simply makes more sense.
But I'm not on a mission to force FS/OSS down everyone's throat, either. Face it, many of these non-profit groups don't have a geek on hand, and the "gift," strings attached or not, will help them do good for the community they support.
If you don't want to see your favorite charity using MS software, get active! Volunteer at their center to install and support their software. Don't sit on
And if, by some miracle, MS suddenly starts giving away all of their software for free, opens their file formats for all to use, cleans up their security, kills off their bugs, becomes a responsible member of society, and everybody's best friend in the software world, didn't we win after all?
"Just another damned fool idealistic crusader..."
And I encourage people to use Linux. And I think people should at least consider changing. But I recognize that Linux is not for everyone. Probably not my parents. Nor lots of other people. I do encourage organizations to use linux when possible. I think if users spent the time to learn another system it would be better for them - and probably much better for the organization as they'd have more options for the future.
Do I hate Microsoft and wish that they'd just go away? No. I dislike their OS's. I dislike their Office suite (to be fair, I don't like Open Office much either). But for most people MS may be the only viable alternative - because they've already bought in to MS, learned how to use Office and Outlook and IE and all - and they're unwilling to learn anything new.
But I also feel very uncomfortable indeed with the idea that MS has a stranglehold on software. I don't want to have to pay for a Windows OS with my computer that I don't want to use. I don't want to find myself stuck with a video card that Linux can't use because the only drivers are for Windows. I really dislike getting MS Word format email. I get very frustrated when there is software written for Windows and the Mac and only a second rate version for Linux (though more and more frequently the Linux version is better than the others). I think the "update office every year" marketing ploy is pretty sleazy (and very clever). I get quite annoyed at the web pages that work on IE only. I've heard personally from people whose companies were destroyed by MS's corporate slash and burn strategies. And so on. And the assumption that "All the world's running Windows" helps to create just those situations.
So, yes. I admit it. Over the years I've developed a dislike of MS which has become fairly intense. And lots of linux people I know have come to feel the same way for much the same reasons. And I've also come to find that most seriously pro-MS people have a stake in MS of one sort or another. Whats yours?
Now - to respond to your comments :
company doesn't have to choose to use microsoft products
Not true in most cases. Most of the time companies have already purchased computers with Windows and Office installed and hired some MSCE types to run them. Changing systems would piss off the MSCE guys big time so they'll resist like hell. It would scare most of the users so they'll resist like hell. Microsoft will resist like hell. The organization will have to worry about changeover costs. If you say they don't have to choose MS, you demonstrate just a bit of ignorance. The pressures to use MS are immense - almost to the point where there is no viable choice.
MS is easy to use
Completely untrue. (I hope I'm not quoting out of context - but I'm not sure what the context was - your sentence got a bit confused there.) With the possible exception of the Mac, most computer systems are difficult to use and to learn. But all the users are taught MS by default (because MS has an effective monopoly on end user computer software), so users think its easy. They only remember enough of the learning process to know they don't want to do it again.
When they say $1 Billion, do they mean what the software would sell for in retail? Or do they mean what it actually costs to manufacture it? At a few cents per CD, that's probably enough to cover the planet in Windoze install disks. (Take *that*, AOL!)
"Screw causalilty!" -- Prof. Farnsworth
That supports his point. The groups recieving the donated software from Microsoft are ones that were already likely to stop paying for MS and either go to a competitor or Open Source (or just use less software).
So by donating to these people, Microsoft isn't losing any sales- they were going to lose the sales regardless.
And in exchange, they gain a slowdown of adoption of alternatives.