Feeds

2004 – the year Microsoft's prices bend, buckle or break?

Israelis demand Thai massage

  • alert
  • submit to reddit

Providing a secure and efficient Helpdesk

Analysis The Israeli government's decision to suspend Microsoft purchases will be old news to Register readers - we broke the story back in October.

But it's the subsequent developments of sweet Thai deals, first reported by YNet, that have implications far beyond the Middle East. Procurement departments in EMEA and the Americas will be watching developments with keen interest.

Two factors contributed to the Israeli moves. The Finance Ministry plays a key strategic role, and was responsible for signing a general license agreement with Microsoft. That agreement expires today. Faced with an economic depression, Israeli government departments are looking to implement IT budget cuts of 25 per cent: OpenOffice 1.1 now looks a viable alternative.

(It's more of a de facto, rather than an explicit shut-out. Departments can still negotiate their own arrangements, and US aid ensures that some licensees are Microsoft-keen, particularly in the military.)

Microsoft scorned the Treasury's decision back in November, comparing OpenOffice functionality to Word 97. But feature saturation appears to have done little to persuade the ministry that OpenOffice is a bad deal. In short, it's lower prices, not more features, that the users need.

Israel, we understand, has become the first EMEA country to ask Microsoft for Thai-style discounts. Faced with low-cost illicit versions of its software, Microsoft dropped the $600 list price to just $37 in the Royal Kingdom. Will Microsoft bend? And will other countries follow suit?

Microsoft can certainly afford to. Redmond's $6 billion a year Office team coasts along on profit margins of 69 per cent. (A fitter, leaner Microsoft that could shake off the paralysis of its 'meetings culture' could boast an even higher margin). Israeli departments has secured a discount over list price ranging from $130 a desk for basic Windows/Office to $186, but are refusing to pay more than the Thai price. Microsoft insists that the Thai deal was strictly a one-off.

There's no doubt that Microsoft, amongst others, finds itself under margin pressure. Sun Microsystems has revamped its software pricing, vowing to turn the $20 billion global software market into a $3 billion market. Sun prices its confusingly-named Java Desktop System, a Linux PC client, at $100 per seat, or $150 in a combined package with the Java Enterprise System which includes the server software (messaging, clustering, grid, etc) too.

But not all public sector procurement departments seem to have realized what power they have. Despite Whitehall's decision to trial Linux/OpenOffice with as many as 500,000 desktops as the prize, the UK education sector recently signed a 'Memorandum of Understanding' that boasted of "spending between 20 and 37 per cent less than might have been expected". Which doesn't sound like such a great deal.

With OpenOffice and Linux bringing serious competition back to the desktop for the first time in almost a decade, Microsoft's prices have only one way to go: down. Redmond's decision to pursue other revenue sources - patents - is as the Free Software Foundation's counsel Eben Moglen said here simply the start of Plan B: "Microsoft executives are aware they have crossed a maturity threshold - they can't grow as quickly as they have before; and even blockbluster products won't change this dramatically," he observed.

So how far, and how fast? ®

Microsoft in Israel

Israel slams the door on Microsoft
MS scorns Israeli OpenOffice defection
Israel accelerates free software migration

Related Stories

UK govt pitches Sun as OSS challenger for 500k desktops
UK NHS trials Sun Linux, threatens 800k user defection from MS

Beginner's guide to SSL certificates

More from The Register

next story
ONE MILLION people already running Windows 10
A third of them are doing it in VMs, but early feedback focuses on frippery
Sign off my IT project or I’ll PHONE your MUM
Honestly, it’s a piece of piss
Netscape Navigator - the browser that started it all - turns 20
It was 20 years ago today, Marc Andreeesen taught the band to play
Sway: Microsoft's new Office app doesn't have an Undo function
Content aggregation, meet the workplace ... oh
Do Moan! MONSTER 6-day EMAIL OUTAGE hits Domain Monster
Customers freaked out by frightful service
Ploppr: The #VultureTRENDING App of the Now
This organic crowd sourced viro- social fertiliser just got REAL
Return of the Jedi – Apache reclaims web server crown
.london, .hamburg and .公司 - that's .com in Chinese - storm the web server charts
NetWare sales revive in China thanks to that man Snowden
If it ain't Microsoft, it's in fashion behind the Great Firewall
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.