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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 ..."
One small setback for Linux; one giant leap down the slippery slope for MS.
If this sort of thing isn't direct evidence of the sure eventual demise of the Business Model as Bill Knows It, then I don't know what is.
"Thank you for calling Microsoft Corporate Sales--in order to direct your call, please enter 1 on your touchtone phone if you are oblivious to Linux. Enter 2 if you have priced a Linux solution for your enterprise. Enter 3 if you have considered a Linux operating system..."
"...all the labours of the ages, all the devotion, all the inspiration, all the noonday brightness..." yada yada
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 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!
Looking for hardware (Currently need: Large Etch-a-Sketch) Have one? See my journal!
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.
$500 AUD =~ $351 USD
$125 AUD =~ $87 USD
01100010 01101001 01110100 01100101 00100000 01101101 01100101
But this isn't just covering Windows Liscenses, It also mentions they're getting exchange 2003 and office 2003 plus they're probably getting quite a nice support package from MS. A copy of windows and office alone is more than $500 in store in Canada which has relatively the same dollar value as the Australian Dollar right now. Make No mistake, they definately got a discount.
I seriously object to the first sentence of that article:
"TELSTRA has secured badly needed cost savings".
Ziggy's not exactly going hungry over there.
For non-Australians in the audience, note that $1-AU ~= $0.70-US. So the cost estimates are around $10.5M - $14M US, or $265.50-$350 US per seat.
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.
when you consider it is Telstra who we are talking about. Telstra seems to want to charge whatever it wants, however it can only increase it's charges in line with costs. So jumping on Linux would decrease thier costs and the ACCC would jump all over them.
Maybe I'm just a cynic and my logic is flawed, but it doesn't suprise me that one monopoly should use get into bed with another monopoly.
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
I was doing some security work for goverment agency in South Carolina and this was the method we used for getting better deals out of Microsoft.
MS Sales rep: "This is the best deal we can give you"
Client: "OK thats fine. Our IT staff is suggesting moving to Linux"
MS Sales rep: picks up a cell and calls the office....."uh-hu"..."linux"..."uh-hu"....hangs up phone. "Ok how about this deal on a Open License package. We can knock another 20% off."
The Microsoft sales team has been ordered to win over Linux at all costs and they mean it.
Free Unix? Free Windows. http://www.reactos.com
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.
Besides, with MSFT the nickle and dime treatment never ends. You pay, pay, pay. Not to mention all the other software you have to buy to keep their crap running right.
Personally, I think it was a bad choice. But if you're going to stay with MSFT, then that's the way to deal with them.
That's our life, the big wheel of shit. - The Fat Man, Blue Tango Salvage
Of course they are willing to burn a lot of cash to maintain market share. MS have yet to have a quarter that comes near to breaking even in their mobile biz. They can afford to wait their time and burn cash in the mobile sector to keep their hands on corporate business.
Engineering is the art of compromise.
But I do not think that they will find value in business suggestions on /. even from an editor.
/. Here are some of the gems I found over the years.
/. instead of calling the company to find out why."
What do you mean? There are plenty of good business/financial suggestions on
"High income = being rich, no matter what."
"You shouldn't invest because you'll have to pay capital gains tax when the value goes up (and is realized)."
"Government should take over the health care becasue they did such a good job with Medicare and Social Security"
"You shouldn't have to put away money for the retirement because Medicare and Social Security is all you need"
"Buying an overpowered computer is a good investment. It's even better if you buy it using a credit card and make only the minimun payments on it."
"If your credit card company raises its rates, bitch on
"Businesses shouldn't lay people off no matter what because it's a bad thing."
"For-profit businesses should exist to serve the mankind, not for-profit."
"The due date on the credit card bill is only a suggestion."
"Pay your bills at the last moment because the postal service always delivers and the online payment system never fails."
"The financal experts recommend that you have 3-6 months worth of living expeses as an emergency fund only because those experts get paid alot."
"Don't budget for the emergency fund because it will cut into your cool gadets (and gaming computer) fund. Use the credit cards instead. And if you do use those credit cards, you'll somehow magically budget to pay off the cards AND the interest over time."
"Don't listen to the doctors who says you should eat healty and exercise. They work for the greedy health food stores and gyms (like you shouldn't listen to the economists because they work for the rich)."
"Don't wear seatbelts. The greedy cops work for the insurace companies (less injuries mean less payouts)."
"Put all your investments into the Linux companies because they'll crush MS, UNIX, and Apple. Don't invest in diverse stock funds, such as S&P 500 based index funds, because they are likely to contain shares of MS and owning shares of it will make you evil, no matter how small."
"It's easier to lobby the government to spread the wealth of the people who actually saved millions for their retirement instead of actually saving for yourselves"
"Best thing to do in a recession is to tax the hell out of those evil corporations to stimulate the job market."
"The rich are evil because majority of their wealth are in form of unrealized gains, which is not yet taxed. They should sell all their investment to buy usless things that they don't need in order to pay the fair share of taxes."
"Even though higher income usually means higher taxes, there's a cutoff point where you don't pay any taxes once you reach the 'rich' status"
1f u c4n r34d th1s u r34lly n33d t0 g37 l41d
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.
Unless my math is wrong, they're paying about $500/user. $125/year. But since most companies will not upgrade the OS or applications more often than every 4 years, they basically are paying $500 to Microsoft for each user. That's a ton of money-- maybe it's all worth it, but I guess this is what people are talking about when they mention the "Microsoft Tax."
Given that it's Australian dollars, and that it likely includes all the goodies (Exchange, SQL Server, etc) along with actual support, I'd say this is a hell of a good deal.
What part of "shall not be infringed" is so hard to understand?
This story reminds me of the one million dollar coffee cup legend.
The legend goes like this: A major company is negotiating with IBM for a new mainframe system. They've called in IBM and gotten a quote. Then they call in Amdahl and get a quote from them and a coffee cup. Next they call IBM back into the office with the Amdahl coffee cup in plain view. Legend has it that the coffee cup gets you an automatic 1 million dollar discount off the original quote.
"Eve of Destruction", it's not just for old hippies anymore...
For the benefit of our American readership, Telstra are Australia's local piece of evil incarnate. They're 51% government owned, so they combine the worst characteristics of rapacious private companies and pig-headed government bureacracy. They price-gouge to an incredible degree on access to the local loop, they deliberately delayed the introduction of DSL services so they could cream more money out of business clients using ISDN (at truly outrageous prices), and deliver shocking service to their customers (ask Bigpond broadband internet customers about the reliability).
Any sufficiently advanced technology is indistinguishable from a rigged demo
--Andy Finkel (J. Klass?)
That depends upon the weight of Australian Dollars and whether it is a metric ton.
Microsoft is getting 180 tonnes of dollars from Telstra, if they were to pay exclusively in one dollar coins. :) Thats 4.5 kg per user.
s .cfm. One dollar coins are 9.00 grams each.
Reference: http://www.ramint.gov.au/making_coins/coin_design
--
no sig for you. come back one year.
That's the magic of it all ... it's not a bluff. If Microsoft doesn't actually cough up the serious discounts, the Linux card gets played. Unless staying with Microsoft is significantly less expensive than changing to Linux, Linux gets installed over MSFT. The more security (and other) problems MSFT operating systems and application programming have, the greater the margin they have to beat Linux by.
Even with the discounts, the sales are still profitable (they have to get below ~15% profit before Bill starts looking for the exit) but the days of 'gag a maggot' margins are nearing their end. This leads, necessarily, to the question of how long MSFT stock will remain at its current levels.
And, if MSFT stock options become less attractive, will they be able to retain their programmers for the same cash wages?
A loss of profit margins leads to a loss of stock value which leads to a loss of programmer income which leads to a brain drain. Responding to the brain drain by upping the cash component of the wages narrows the profit margins even further.
This cannot be good for Microsoft.
Linux just gives them a justifiable destination other than Microsoft.
Time to invent a new word: "linussend", as in "You mean we don't have to shift onto MS-Windows when our hardware becomes obsolete? Hurrah! What a linussend!"
Got time? Spend some of it coding or testing
It's more likely that their internal billing system screwed up again and disconnected them.
Got time? Spend some of it coding or testing