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Telstra Used Linux To Get Microsoft Discounts
awful writes "Last year Slashdot ran a story about Australia's largest telco moving to Linux desktops. Turns out it was all a way to get some tasty discounts from Microsoft. The Australian is reporting that Telstra just signed a four-year deal with MS for $AU15-20 million, for 40,000 users. No figures yet on how much of a discount Telstra got, but MS might want to rethink handing back all its cash to investors if this is how they're going to do business from now on ..."
Sounds like capitalism at work :)
:) Way to use the free market to your advantage.
I love linux, but, go Telstra
Jay | http://oldos.org
Maybe, just maybe, this is how Microsoft intends to do business in the future?
This kind of first-MS-then-Linux-finally-MS stunts by any company is going to give free publicity to Microsoft, and more and more companies will be attracted to buying MS products because they thought they're getting a discount now.
And frankly speaking, $375 per user is still better than $0 per user, and lose face to Linux.
Uselessful technology (Air-Charged
Wake me up when Microsoft beats Linux on pricing. ;-)
MS might want to rethink handing back all its cash to investors if this is how they're going to do business from now on ...
/. even from an editor. Sorry, just felt compelled to say that.
Microsoft might suck in terms of security. They might suck at guessing what users will want and innovating to it (they guess what users are using and make their own version). But I do not think that they will find value in business suggestions on
I don't see why (apart from the moral issues) more companies don't use this strategy as a way of saving lots of money and scamming big companies out of more profits.
-- Get
"...and press 4 if you are actually using linux in hopes of getting a discount."
seriously though, this is quite the dilemma for microsoft. on one hand, more companies might consider this method, and microsoft wins because of a larger userbase for its products. on the other, it has its investors whining because of these business methods that are losing profits. it'll be interesting to see how microsoft plays this to keep its investors happy while keeping linux pinned down (somewhat).
I doubt it - this is the way business has always worked, it's only front page news because it's Linux vs MS.
If it was HP vs Cisco or any other 2 vendors which selling competing products it would have been rejected.
Hell, if you're in charge of buying product X for your company and DIDN'T try to lower the price buying shows quotes from companies Y and Z, I'd worry!
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Somehow I doubt this is the case.
Telstra's IT head wanted to run Linux to cut costs. In a business they figure things out using a cost-benefit ratio. In fact, most human beings do this.
Microsoft simply offered them a deal with better cost-benefit ratio. Telstra aren't going to be downloading ISO's, they would be buying something like SuSE or RedHat. So Microsoft simply discounts prices, and Telstra has cut costs, without needing to move everything across to a new system.
As an Aussie, it's my duty to hate Telstra, but the headline is so very wrong.
--
The last digit of pi is four.
it only means they won't make as much money. Btw people have been predicting microsoft's demise since OS/2, I guess one more wouldn't hurt
did you forget to take your meds?
$125/year is about right for a corp, hardly a discount -- this isn't just Windows, but MS Office, Exchange CALs, etc. Probably a drop in the bucket compared to what they pay Oracle, IBM, SAP, etc for the backend stuff.
Also, a 4 year upgrade cycle is pretty normal nowdays, especially since Windows and MS Office are basically stable and feature-complete enough for most people.
Really, this is not news. Companies have been doing this for the last year and a half, ever since Microsoft announced that they would give substantial discounts to any Linux user who converts to MS. They have nobody to blame but themselves, surely they anticipated this. Users are just being smart and playing the software licensing game, which has always been traditionally in favor of the software companies.
What this means is that in 4 years when their indenture to Microsoft is up they will likely consider an Open Source alternative again. If their IT budget is under the same pressure then and their alternatives are using Linux/OSS on existing machines or upgrading all their machines to Longhorn + required hardware, Microsoft may not be celebrating a win.
I think this is the best incentive for people not to add bloat and extraneous features to key OSS components (I'm looking at you Gnome guys and Kevelopers).
Comment removed based on user account deletion
Give me a better price, or I'll go with the competition. I do that when I'm buying a refridgerator. What's the problem?
Frankly, I think we've grown so accustomed to msft's monopoly, that we've forgoting that competition is supposed to be a normal way to do business.
If msft want's to fight for their business that's fine. I'm just glad that there finally is a something that is real competition to msft's monopoly.
In product pricing is trying to reclaim something called the "consumer surplus". The idea here is that the amount of money that each of your potential customers is willing to pay is different; vaguely speaking, you want to choose the price that balances out being low enough that you retain as many of your customers as possible, while being high enough that you make a lot of money on each unit. Still, there's always going to be that consumer surplus-- the amount of money lost to the fact that a subset of your customers would have been WILLING to pay much more, but because you have to charge them the same amount you charge everyone else you only got the same amount from them you got from everyone else.
This is why you're in very good shape if somehow you can work your way into a sales model where, as happens with an auction, or with car sales, you're somehow able to tailor your price to what exactly each individual customer is willing to pay. You maximize both the number of customers you get, and the amount of money you could get from each one.
This is where Microsoft's doing and it isn't a bad thing for them. Microsoft's prices are ridiculously high, and the market is beginning to realize this, but rather than actually correct for this and charge reasonable prices, they're simply continuing as they have and making special allowances for those customers who might be leaving.
Or, in other words: This shouldn't be seen as a victory for Microsoft's competitors because Microsoft's having to lower their prices for the customers who are threatening to leave. It's a victory for Microsoft, because Microsoft isn't having to lower their prices for everyone else.
MS will use this in ads, and MS sales folks will mention this. "Telstra looked into Linux, and they saw MS is a better deal."
There will also be some kind of press release, with quotes in it like:
Mr. I. T. Director of Telstra says, "Microsoft's TCO was compelling, yada yada yada."
Probably MS will write the quotes for Telstra.
None of this is shocking or new. This isn't even the first time I have read a story like this on Slashdot, let alone the first time it has ever happened. (Remember when Home Depot announced they would go to Linux for their POS terminals? Remember when they announced they would go to MS?)
steveha
lf(1): it's like ls(1) but sorts filenames by extension, tersely
But isn't this the only option they really have? This is what competition is all about!
Everyone knows Microsoft has been cleaning up because they are a monopoly. (Whether a good or bad monopoly is another subject.) With competition, everything changes. To keep up you have to make an offer to the market with some efficiency, service, feature, innovation or quality that no one else can provide.
But on the desktop, Microsoft is now being pinched from above (Apple) and below (Linux). Granted these competitors are not yet worthy to take the whole pie but I'm sure Redmond is beginning to understand that they are fighting a two front war. And their ability to attack one competitive front only exposes a weakness to the other. The article suggests to me that this reaction is against the bottom: Linux is simply cheaper, Microsoft has to respond with significantly better pricing to make the sale. (Maybe Longhorn is an effort to compete more with Apple by offering a competing design level or media friendly platform?)
Having been around a while, I find this all very facinating because I can see how fast the tables turn in this industry. What they once did to others is now being done unto them. :) The best part is that the market can now feign to either side and Microsoft has to respond. They can negotiate against price point or from design/usability.
During such an innovative time (historically speaking) many disruptions occur. It's nearly impossible to keep any ship afloat for more than a generation. As Microsoft enters its second one, I feel certain we'll see more of this type of behavior as they struggle to keep momentum. Sit back and watch the show!
There is no need to use a SlashDot sig for SEO...
wow you totally missed the spirit of the comment. /. tends to put MS in a bad light any chance they get (can't say I blame them). The comment was to point out that MS isn't going to get the profit margin they want anymore so maybe they should rethink giving even more of their profit away. Thus the comment was trying to question MS business decisions. NO WHERE in there does the fact that this is a aussie company come into play. It was not intended to make MS look like a victim I assure you.
And that's what Linux is: the commoditization of the consumer software market. And in a commodity market, the cost of a single unit is little more than the marginal cost to produce that one unit....
So I'd want all that cash M$ has before they piss it away to someone else.
You don't rake in 80% profit margins year after year by undercutting the other guy, you do it by being the #1 and only.
But if too many of these "linux switches" turn out to be bluffs, MS won't be so generous with the discounts.
"I will be wealthy in six months, unless VA [Software] or the U.S. economy craters before then. I'll bet on VA; I'm not so sure about the U.S. economy :-)." -- Eric S. Raymond, December 10, 1999.
Most slashdotters think that great computer skills somehow equals great financial skills and that they can learn all about accounting and economics in CS classes (I only learn about computer stuff in my CS classes, so I guess I got ripped off).
1f u c4n r34d th1s u r34lly n33d t0 g37 l41d
You're absolutely right but neglect the important point, it hasn't been a a necessary desktop tactic for Microsoft for a very long time. Since the OS/2 days?
Great! Hopefully other companies will use Linux to leverage Microsoft into deeply discounting their overpriced software.
I don't like monopolies because they lead to unimaginative products with high price tags. Competition clears the stagnant air and fires the imagination of those who seek to build and compete.
Linux will never go away. Nor will Microsoft in all probability. It's an ecosystem that's not pretty, but it gives me lots of cheap hardware that's useless to bloated MScode. I like that. And I'm glad people will use Linux anyway they see fit, even if it's to negotiate a better deal.
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How do you reconcile that view with Oracle? Oracle is the creme of the crop in relational DB's. Oracle is an aggressive marketer.
Oracle starts very expensive -- most expensive of any big relational DB vendor.
If you work with them at a sensitive period (end of a quarter, end of a year, etc.) you will get a large discount. Big customers can get huge discounts -- rumored to have been in some cases 95%. Most times we are talking less than 50% from what I've seen but remember -- with MSFT and Oracle list is only paid by tiny consumers and companies that neeed to have their heads examined.
I wouldn't call the above statement pathetic. Ever heard of how hard Telstra makes it to put 3rd party DSLAM's in exchanges (remember: Telstra's wholesale DSL network is limited to 1500/236k)?
They literally force you to give them the equipment for free and pay the monthly maintenence charge for it.
Ethics? Proprietary information? Since when is pricing of products of a public company private by any means? Doesn't capitalism encourage us to shop around for the best deal, comparing companies and setting them to fight against one another in order to ultimately provide a better deal for the consumer?
I opened your link, and nowhere there does it mention anything about pricing combined with unethicalness or unprofessionalness of revealing it to anyone else.