[frgeek-michiana] Re: Microsoft's Software Philanthropy: The Goodwill Ploy (slashdot)

Here is the NYT article for those not able to access it:

Mike

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May 26, 2003
Microsoft Finds Some Doubters for the Motives of Its Largesse
By JOHN MARKOFF


AN FRANCISCO, May 25 ? Even when the Microsoft Corporation attempts to do good, its critics distrust its motives.

The company is significantly increasing its donation of software to the nation's nonprofit organizations, to a level that may approach $1 billion annually in the next three to four years, according to the organization that will distribute the software. Executives at nonprofit organizations are applauding the expected increase in donations, up from $207 million in estimated retail value last year.

But the increase has also drawn objections from developers of "open source" programs (programs for which the source code is freely distributed). Those critics say they believe Microsoft is using a giveaway strategy to undercut the so-called free software movement in the potentially promising nonprofit market.

Microsoft's donations ? the total will be determined by demand from nonprofit organizations ? will be offered through CompuMentor, a nonprofit agency in San Francisco that provides technical consulting and distributes donated software for commercial software companies including Cisco, Adobe, Lotus and Symantec. Microsoft executives are skeptical about the size the of increase, but said they believed it would at least double. Currently, Microsoft represents more than 75 percent of the donations.

The increased donations come at a time when Microsoft has adopted a strategy, as reported by The International Herald Tribune, to discount its software in Europe for government and large private agencies to counter the growth of open-source programs, like the Linux operating system and OpenOffice, that might potentially threaten its dominance in the desktop computing marketplace.

Microsoft executives have said that they consider open-source software one of the company's most significant competitors.

In the United States, some advocates of the open-source movement have viewed nonprofits with limited budgets as a logical first market for free software.

Several nonprofit executives said they believed Microsoft was moving to ensure that free software would not gain a foothold in organizations that normally could not afford large commercial software packages.

"As a monopoly, Microsoft's below-market-price distribution of software might very well be a form of illegal competition for a particular market," said Michael Gilbert, a consultant to nonprofits and director of the Gilbert Center in Seattle.

Economists and antitrust experts say the issue is murky. Discounting is legal unless it is predatory, but proving anticompetitive intent by Microsoft in its philanthropy is unlikely.

"I have never seen an antitrust challenge to what in essence is charitable giving," said Andrew I. Gavil, a professor at the Howard University School of Law.

Microsoft executives said market competition played no part in their decision to increase their donations. "Maybe this is a case of no good deed going unpunished," said Brad Smith, Microsoft's senior vice president and general counsel.

Similar questions of motive arose last year when Microsoft proposed settling several state antitrust lawsuits by donating software to educational institutions.

After Apple Computer objected, Florida and Montana deals were altered and Microsoft will instead supply vouchers permitting educators to buy software from any company they choose. Mr. Smith said Microsoft was trying to negotiate a similar settlement to a California suit.

Several independent open-source software developers said they believed the donations had a strategic as well as a philanthropic intent.

"Microsoft's culture is about unfair competition," said Mitchell Kapor, a Microsoft critic leading an open-source project to build a program called Chandler that will compete with Microsoft's Outlook when it is released next year.

However, Mr. Kapor said there were positive aspects to Microsoft's increase in donations. "Within limits, it is good for Microsoft to give away software to nonprofits that can't afford it," he said, adding that if the strategy rises to the level of unfair competition "it becomes a problem."

He noted that in the future competition between Microsoft and the open-source community would be less about price and more about factors like total cost of ownership and technical support.

"It's a pretty transparent strategy," said Michael Stein, associate director of Groundspring, a San Francisco-based organization that develops software for nonprofits to manage relationships with donors and clients. Despite his commitment to the open-source movement, Mr. Stein also said he felt that the Microsoft donations were good for nonprofits, which often face severe financial limits.

"From the perspective of our constituency, CompuMentor becomes a hero," he said. "Everyone needs Microsoft tools."

His view was echoed by David Geilhufe, senior program officer at the Beaumont Foundation of America, a grant-making organization focused on giving computer hardware to disadvantaged communities. "Microsoft is the standard, and its software has more features than open-source software," Mr. Geilhufe said. He added, however, that freely available open-source software might prove to be a better long-term solution for the needs of nonprofit agencies.

A number of open-source developers have also questioned whether Microsoft can be trusted to make long-term commitments to nonprofits.

"Maybe this is paranoia or maybe its historic perspective," said Michelle Murrain, a programmer and a member of the steering committee of the Nonprofit Open Source Initiative, a group trying to build support for open-source software among nonprofits. "Microsoft could throw in all this software for the next two years and then just stop and people will be hooked."

CompuMentor executives said they were reaching out to open-source software developers and hoped that in the future they would be able to add free software to the options available for nonprofits.

"There are tools that will help nonprofits that can only be built in open source, and we want to help with that," said Phil Ferrante-Roseberry, CompuMentor's executive director.

Earlier this year, at a gathering for their financial supporters, which Microsoft co-sponsored, CompuMentor executives showed a chart that indicated the organization's total software and hardware distribution to nonprofits would surpass $1 billion by 2006.

Microsoft executives said they are not certain that the program would prove as popular as CompuMentor estimates. They said the volume of donations would grow significantly, but perhaps not more than double current levels.

Mr. Smith added that even if CompuMentor proves correct in its estimate, the impact on the software market and Microsoft's ability to hold on to that market would not be very significant. Currently, the estimated retail value of the software that the company is giving away is less than 1 percent of its total sales, he said.

Even if the volume becomes significantly larger, it probably would not be greater than 2 or 3 percent.

"In reality, the big question that I worry about is not whether we're doing too much, but whether we're doing too little," Mr. Smith said.





Copyright 2003 The New York Times Company



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