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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?"
A good read is here
I'm not Seth.
"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)
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.
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
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
A price could still be charged for the software (albiet less than microsoft) and the company could offer enhanced support at an added cost. Microsoft giving away its software means it is cheaper than even the open source alternatives and if it is available, orginizations may not even begin to research alternatives.
Its not free vs free, its free(but used to be expensive) vs free (in concept, but lower in cost), that is why microsoft would be undercutting the open source alternatives
Bottles.
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 worked for a non-profit organization once.
For an organization of about 100 (maybe more) people, there was exactly ONE IT admin, plus one intern like myself.
Sad thing is, though, neither MS nor OSS, to me, provides the best solution - because non-profits are usually so cash strapped - which turns to be people-strapped, time-strapped, etc.
I remember back then we tried to set up a whole slew of services (this was before MS BackDoor erm BackOffice) came out - and tried to put almost the entire line of MS servers onto one NT4 machine. needless to say, the thing would crap out just sitting there idle. (and these were donated software. sorry to say but MS has been donating to non-profits for a loooong time, for good or bad)
With that kind of instability (and we can't afford shiny new dells, so we get all the systems either custom build very cheaply, or get donated used ones), MS servers won't do. Maybe now it's better, but with the kind of system requirements, I seriously doubt we can run XP / 2k Servers.
However, i don't really think linux would really do either - because user-support is the rest of the spent time when the IT group (the 1.5 person - one admin and the part-time intern) isn't fiddling with junk. And I just can't see any possibility in training 75 year old gradma's (seriously - some of them really were!) to do any new computing technology within any kind of resonable timeframe. I am sorry to say, guys, KDE and GNOME is not the easiest to figure out, and certainly not the easiest to teach. The UI design does not follow a strict standards across OSS software (okay, to me anyway), so that causes a lot of problems.
I personally think that if Apple gave us a huge slew of over-stocked iMacs, we'd been all set. I think macs tend to last a lot longer than PCs (average life span, anyway - maybe it's due to the higher per-unit cost?), but doesn't degrade into pitifulness nearly as fast; even right now the first-gen iMacs, I think, are still usable. And yes, Macs are more intuitive UI-wise.
But that never happened, so when I left, the lone IT admin was still holding back the fire, in the most endless, swamped way...
Okay, I am sure that was related somehow, though not sure HOW exactly.
My life in the land of the rising sun.
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.
> Did somebody forget to proofread this article before posting? That makes no sense - how in the fuck can you undercut a free product?
The point is that Microsoft can only maintain its monopoly in the for-pay sector if it maintains the illusion that it's the standard. This "offer" is exactly like the 90% discount for Munich: if word ever gets out that the free stuff is good enough for organizations, Microsoft is fuxored.
They aren't any more worried about loss of revenue in this market than they are about loss of revenues from Munich. They're worried about a paradigm shift in the way the world acquires its software.
Sheesh, evil *and* a jerk. -- Jade
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.
That'd be nice if they were actually giving money. They aren't. They're printing "money" in the form of CDs and giving that away. Then they say that they gave millions or billions to non-profit organizations when in reality they maybe spent a couple thousand. But they can claim millions in tax deductions.
In reality, they're hurting the non-profits more than helping them. by accepting the 5 copies of XP (or whatever), the NPO is opening itself up to more liability (BSA thugs). In addition, by getting the NPO's hooked on the particular product, they will be more likely to purchase more products from MS in the future (not that other companies don't do that, it's just not entirely altruistic).
But what really upsets me is that the donations of software (all proprietary software, not just MS) to NPOs is like delivering a big can of trash to them. I don't say this because I'm biased against proprietary software, I say this because the software has no resale value for the NPO. If I donate something physical to a NPO and they have no use for it, they can at least sell it to someone else and get some money to help their cause. But they can't do that with donated software (or at least it's really hard). So if an NPO gets 5 copies of Windows XP, but doesn't have any use for them (maybe all their computers are too old), they now have 5 coasters, and MS can take $1000 in tax deductions.
If MS wants to give billions in cash to NPOs, that's great. A true example of good corporate citizenship. But if their donations are software that they can donate with very little cost, that's pretty deceptive. They should really claim their donations in resale value, not the manufacturer's suggested retail price.
"Save the whales, feed the hungry, free the mallocs" -- author unknown
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
Because at $0, a familiar OS and applications readily that doesn't require Unix expertise might beat having to figure out why devfs isn't finding my fucking IDE Zip drive, while at $1200 for Windows, Office and utilities, cursing devfsd.conf seems more cost-effective.
I suppose technically that might not be "undercutting" but that's getting into hairsplitting.
What I'm listening to now on Pandora...
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.
Exactly.
And it isn't like they are giving away $1 billion in cash. They are giving away the worth of the costs of CDs enough to store software worth $1 billion.
The second thought that pops into my head - will the upgrades be given away too?
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The combined human population is enough to feed every living tiger for app. 28000 years.
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
I work for a NPO. We already use Microsoft products - Windows 2000, Office 2000, and Exchange would be the major apps. Due to budgetary constraints, we've decided not to upgrade until the Windows/Office version after the Longhorn release in 2005 (whatever that release may be... ); we started setting aside money for that upgrade in 2001. Budget is the #1 thing on the minds of every executive/manager at an NPO.
FWIW, at an NPO, any $ used comes out of a donation from a charitable person, institution, or corporation, who probably envisioned their donated $ going toward the benefit of whatever community the NPO services; I doubt seriously that most people envision their dontations going straight to Bill Gates & Co. when they sign their names on the check, be it for AIDS research, building homes for the homeless, etc. If MS is willing to provide NPO's with or reduced cost software, the end benefit is that the NPO will have more funds available to help their constituencies.
Oddly enough, I was involved in a discussion of this very topic today!
My mother is an office manager for a "Safety Council"; my wife is an administrator in the American Red Cross. I also worked for a compnay the designed a SQL Server-based databank for the Red Cross.
Both organizations are tied tightly to Microsoft, in part because of the freebies, and in part because of corporate culture. They'd be silly to turn down millions in free software, especially hwne it is the same software they already use.
Do I take the free (as in beer) software that I know, or the free (as in leberty) software that I'll need to retool and retrain my staff for? Add in data conversion and other factors to see why the non-profits drink the Microsoft beer.
I'd rather the Red Cross take free software from Microsoft than have them lay off disaster personnel so they can retrain and retool for "free" software. People don't give a flip about Linux-vs.-Microsoft when their house is spread across three counties.
As for non-profits being "lucrative" -- no organization that relies on donations is lucrative; non-profit means limited budgets.
That's not to say that Microsoft doesn't recognize the benefits of "giving." Perhaps someone at Microsoft gets a warm fuzzy feeling from donating software, and I'm certain that their accountants like the associated tax write-off. But I'm sure it hasn't been lost on Microsoft that giving software to non-profits is both good advertising and good training.
Is Microsoft being Machiavellian? Yes. Does it matter? Probably not.
All about me
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.
they do.
the executives of microsoft have donated more REAL, physical dollars to various causes around the world then you ever will.
Look at the Gates foundation sometime. You are a nobody in the world of philanthropy, comparatively, regardless of what pseudo-intellectual way you want to measure it.
My opinions are my own, and do not necessarily represent those of my employer.
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..."
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.
I know most people don't study or have a clue about business on /., so let me challenge your conspiracy theory with, "No, MS can not get a tax writeoff for a $1000 Windows Server License", simply because a tax writeoff has to do with cost, not potential revenue.
There is no longer anything that can be done with computers that is nontrivial and clearly legal. -- Paul Phillips