Microsoft Needs to Address Loss of Government Desktops to Linux

by Alex Woodie

Microsoft recently announced agreements with two Southeast Asia governments to sell a stripped-down version of Windows to consumers in those countries. But in other parts of the world, especially in Europe and the United States, cities and other municipalities are lining up to recommend that government buyers do not give their money to Microsoft, and instead invest in open-source platforms, such as Linux.

Several European governments have opted for Linux recently. On Thursday, the city of Munich, Germany, officially switches 14,000 government PCs from Windows to Novell's SuSE Linux, along with the OpenOffice productivity toolset and the Mozilla browser. While Munich's is reportedly the biggest such migration ever, it could soon be dwarfed by large Windows migrations in France, where state officials last week announced plans to significantly cut budget deficits, in part by using cheaper open-source software on almost one million state computers. Paris isn't yet requiring that Linux be used, but it is putting Microsoft's rather inflexible license fee policies on the spot. The moves are fueling speculation of mass migrations off Windows (see "Governments to Go Ga-Ga for Linux?").

U.S. state and local governments are also looking to open source software to reduce license fees. Austin, Texas, is reportedly looking to see how Linux would do on more than 5,000 Windows PCs, as a large maintenance contract with Microsoft is set to expire in December. And the state of Massachusetts (one of the most vociferous and zealous participants in the antitrust lawsuit brought against Microsoft by states and the Department of Justice) last year enacted a policy that favors "open standards" in new computer systems purchased by the state.

In Asia, Microsoft is facing resistance to Windows on several fronts, including the governments of Japan, China, South Korea, and Singapore. Widespread software piracy and Microsoft's pricing policy, which holds that its Windows products should cost the same, no matter where in the world they're sold, has lead some government officials in these countries to adopt a preference for open source software over Windows.

Microsoft last week announced Windows XP Starter Edition in Malaysia and Thailand, two developing markets in Southeast Asia whose governments have also flirted with open source. In Thailand, a government-sponsored program to provide its citizens with low-cost PCs has, up to this point, relied on Linux, while Malaysia officials have looked to Linux to reduce license fees on government computers. Windows XP Starter Edition is a stripped-down version of Windows geared toward beginning computer users. It will come with Internet Explorer and Windows Media Player, as well as programs to help beginners learn the system.

Bill Gates, Microsoft's chairman and chief software architect, meanwhile, was in Malaysia this week for a meeting of the Association of Southeast Asian Nations, where he was expected to discuss the possibility of reducing Windows prices for Asian governments, according to the Dow Jones news service.

This would be a good move on the part of Microsoft. Having a more flexible Windows pricing scheme makes a lot of sense, especially when confronted with the different market dynamics in Asia, which is in the early stages of IT adoption and hasn't made a platform decision, and in Europe and the United States, which have largely already made platform choices but will pull the plug on Windows and move to Linux if they can prove that it will cost less and won't impact productivity. Sun Microsystems, for example, has a flexible pricing program that sets prices based on a country's rating in the United Nations rankings of economic development. Will Microsoft follow the lead of its new-found technology partner and do the same? It probably should, and will probably have to.