Microsoft’s US Classroom Monopoly Play

Only a company like Microsoft could be attacked for offering kids free computers. But that was what happened when the company announced recently that it would donate up to $1bn worth of computers and software to more than 12,500 schools in the US.

Microsoft made the offer in November in an attempt to head off more than 100 class action lawsuits that accuse the company of “price-gouging”. But soon the company found itself in hot water, harangued from commentators who said the company was simply trying to sew up the one market it doesn’t already dominate: education.

Steve Jobs, CEO of Apple - which has traditionally done well in schools - was one of the first to express disgust. "We're baffled that a settlement imposed against Microsoft for breaking the law should allow, even encourage, them to unfairly make inroads into education — one of the few markets left where they don't have monopoly power," he said in a statement. Apple has a reason to be concerned: its share of the education market (elementary and secondary schools) has fallen from 47 to 26 per cent in recent years.

The normally placid New York Times was also scathing: “Microsoft competitors who have suffered from the monopolist's unlawful behavior would stand to suffer more from the settlement,” it said in an editorial.

Matthew Szulik, CEO of Red Hat, a leading provider of Linux software, added something similar. “While we applaud Microsoft for raising the idea of helping poorer schools as part of the penalty phase of their conviction for monopolistic practices, we do not think that the remedy should be a mechanism by which Microsoft can further extend its monopoly,” he said.

As part of its complaint, Red Hat made an offer to counter Microsoft’s proposal. It offered “open-source software to every school district in the United States free of charge, encouraging Microsoft to redirect the money it would have spent on software into purchasing more hardware for the 14,000 poorest school districts. Under the Red Hat proposal, by removing Microsoft's higher-priced software from the settlement equation, Microsoft could provide the school districts with many more computers--greatly extending the benefits Microsoft seeks to provide school districts with their proposed settlement.” Red Hat claimed that the proposal would “increase the number of computers available.. from 200,000 to more than one million, and would increase the number of systems per school from approximately 14 to at least 70.”

Not bad – but no cigar. Microsoft has rejected the offer.

To be sure, Microsoft’s offer wasn’t charity; it was a shrewd business decision. You wouldn’t expect anything less from this brilliant company. The offer would not only settle the lawsuits, it would also do little to affect the company’s bottom line, and would even make the company look generous.

And after all, business is business. Microsoft is only doing what any other company worth its salt would do: It is winning. While its competitors are whining, it is getting with its mission to dominate everything from PCs and mobiles to e-commerce and cable TV. As it has done a thousand times before, it is simply reacting to market opportunities – in this case, one that most people thought was supposed to be a slap on the wrist.

And, surely, Apple is just as bad - as my friend Ralph Weedonovski, president of timiCom.com, points out. “Microsoft is a very powerful global corporation intent on world domination - and the schools thing is a very cynical attempt to sew up the US schools sector. However Apple are reported to be just as evil in the Naomi Klein Book No Logo - on exactly the same issue - luring schools into using Apples...”

But the latest debacle does illustrate a long-term PR problem for the company: namely, that whatever it does, Microsoft will always be hated more than it is loved. Even while its share was rising this month, and even as it released a fancy new operating system, an innovative gaming console, and was finally settling a swath of crippling of lawsuits. Even then, plenty of people – from techies, to Mac-users, to designers, to governments (e.g. the Chinese who want wants businesses to use Linux rather than Windows) – continue to despise the company.

To be sure, the Mac-PC debate is stale, as Ralph says. “I find the whole Mac/PC debate kind of irrelevant too - there are different kinds of people who want different things from their computing experience.. The nerds will always buy PCs and the trendy designers and journos will probably always buy Macs. Good for them.”

And yet there is something about the company that leaves a bad taste (as Steve Jobs might say). There is something about Microsoft that is unseemly, that proves Orwell right, that makes modernity seem more threatening that it should.

My friend Andrew, also of timiCom, says: “Get over it”. But I’d rather go along with Ant, another friend, who says there is a better way. “Out there, beyond the grey buttons and the ‘Please restart your computer’ notices, there is a land where you are free to write whatever code you want and where you don't have to pay money to someone just for an operating system and for a lot of software that came with it that you don't want,” he writes. “You can join them. You just have to dare to dream...”

ENDS

© Scoop Media