Ballmer lobbying fails to prevent Linux defection

Microsoft’s two decade-long domination of the PC software market is beginning to show its first signs of slipping — according to rivals celebrating a series of decisions in favour of open source software to replace Microsoft Windows and Office.

The latest defection came in Germany late last week, when IBM and the Unix software distributor SuSE jointly announced that the City of Munich is to migrate 14,000 desktop and laptop computers off of Windows and onto Linux.

Although the cost savings have not been revealed, sources have said that the City council is going ahead in spite of migration and training costs of as much as €1 million.

The decision by the City of Munich follows nearly a year of intense lobbying by suppliers. IBM hosts its major European software conference in Europe every Spring, where senior executives have met Munich Council officials. Microsoft CEO Steve Ballmer also recently paid a visit to Munich to try to dissuade the City from dropping Windows. He is believed to have offered some large concessions, including a discount of up to 90% on the licence costs, according to some reports.

An ebullient Richard Seibt, the CEO of Nuremberg, Germany-based SuSE, hailed the council for making “a courageous, momentous decision to choose the right technology at the right time”. He said the move would not only save money, but bring the City “security, stability, flexibility and privacy not available to them before.”

Walter Raizner, country general manager for IBM Germany, said that IBM had now picked up 75 public sector customers across the world. “One thing is clear, it is open season for open computing,” he said.

Microsoft is believed to have lost a number of public sector deals across Europe because of legal requirements to buy from the cheapest viable supplier. If training and support costs are put aside, the combined price of Windows and Office on every PC far exceeds the cost of Linux and low cost or open source productivity applications, such as OpenOffice and Ximian Evolution.

Microsoft and the open source community strongly disagree about the cost of ownership of Linux on the desktop, with Microsoft arguing that ultimately, using Linux doesn’t pay. According to a report by OpenForum Europe in mid-2002, a third of European businesses are considering using desktop Linux to cut costs. However, in practice, very few have so far made the switch.

The Gartner Group estimates that about 1% of all PC users worldwide use Linux, but that this could rise to 4% in the next two years. SuSE’s main rival Red Hat believes that the next two years will key to whether desktop Linux goes mainstream or not, particularly when the Ximian Evolution email and scheduling client is able to seamlessly plug into Microsoft Exchange and Lotus Domino.

As Linux has improved in quality and slickness, Microsoft has been driven to offer larger concessions to its biggest corporate customers, including major discounts in licence fees and even offering the software for free in some cases, just to hold on to key accounts. According to some analysts, one of the main bargaining chips corporate customers can use to extract big concessions on prices from Microsoft is to claim that they are considering a switch to Linux.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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