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09.10.08

Acer in Australia: Dirty Microsoft Tricks Against GNU/Linux

Posted in Australia, GNU/Linux, Microsoft, Windows at 3:35 pm by Dr. Roy Schestowitz

Market distortion example

A rather serious new case of government’s budget misuse has just been identified and it spreads very quickly at the moment due to its outrageous nature. Here’s the gist of it.

What you see below is a current ad from an educational IT suppliers br[o]chure. It features the new Acer Aspire One netbook in both Windows XP and Linux incarnations. What’s odd about it? The lower spec machine with the free operating system costs half again as much as the higher spec one running Windows.

How can this happen?

Well, here in Victoria the state government has done a deal with Microsoft, which as I understand it essentially means all state schools get their copies of Windows paid for by DEECD. So if a public school buys a higher spec netbook with Windows XP, they get a $156 discount from the government. If they buy a lower spec one netbook with Linux they do not.

So, the government is sponsoring Microsoft’s monopoly while demoting free(dom) software at taxpayers’ expense. Brendan Scott, an Australian lawyer specialising in Free/open source software, has just commented on this issue.

Strike me pink! Less than a week after OSIA sent its submission to a Victorian Parliamentary inquiry into how Victoria can better engage with open source, Cafuego reports some very concerning goings on to do with the Acer Aspire One, the Victorian Department of Education and Early Childhood Development and apparently discriminatory treatment by the Department of machines loaded with XP compared with those loaded with Linux (when being sold to eligible purchasers).

The one comment at the bottom states: “It looks like the Victorian Department of Education and Early Childhood Development need to be sued.” Well, it did happened in Quebec quite recently [1, 2].

Steve BallmerThis one particular incident will be an excellent case study in monopoly abuse and may also serve as proof of continued abuse of market position by Microsoft.

Earlier today (late afternoon to be precise), a reader from Australia independently brought up the topic of Acer laptops. In the IRC channel he told us not about market distortion using deals but using word of month. It started with a discussion about Eee PC. Specifically he said: “Is anyone able to get GNU/Linux Eee’s anymore? We had a customer who wanted a 901 with Linux but we couldn’t get one. The major supplier is only offering XP [...] Can get Linux on a 900 Celeron but not a 901 Atom. We have had requests for both versions, but only one is made available.”

“Gartner was doing the Microsoft dance once again.”This issue of GNU/Linux-powered Eee unavailability (e.g. in the UK) was already discussed in here. Australia too had some strange incidents reported — incidents where the GNU/Linux-powered Eee PCs were made more expensive than their Windows counterparts. The company later equated the prices, trying to ‘correct’ the error despite being "closely tied up with Microsoft.”

This brings us to Acer. Gartner was doing the Microsoft dance once again [1, 2, 3]. Our reader says: “This is from within our company who is partners with Acer: Gartner did a market study fo[r] Acer and told Acer that Asus was having “a lot of trouble” with Linux and it isn’t working for them so they are getting out of it. I did note to our directors that Gartner’s biggest client is Microsoft but only a couple of people were listening.”

Further he adds: “I’m not sure what Acer is up to really. I hope they’re telling the truth because the pressure within our company not to promote Linux came from Gartner – through Acer. Acer was passing this on and not adding any caveats about Gartners ‘analysis’.”

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24 Comments

  1. Rui Miguel Silva Seabra said,

    September 10, 2008 at 4:18 pm

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    Portuguese ACER, when asked by a prospecting customer about returning Microsoft Windows, proposed a process which is more expensive than the refund, and refuses to assume almost any liability.

    Portuguese HP does not sell to consumer market without Microsoft Tax, and waives almost all issues from warranty.

    Portuguese Toshiba goes even further, and not only doesn’t sell without Microsoft Tax, but also it extends the shrink-wrap concept of software licensing to opening the cardboard box containing the laptop.

  2. bob said,

    September 12, 2008 at 10:02 pm

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    I don’t understand the logic here.

    Microsoft pays money to DEECD as to promote a computer that is preloaded with their software. As a result, the machine running with Windows is cheaper than the lower spec machine running GNU/Linux. Therefore, Microsoft is doing dirty deals against GNU/Linux?

    Why is this a problem? Why does it matter that GNU/Linux is more expensive than Windows? Doesn’t a greater price mean the product is more valuable?

  3. Jose_X said,

    September 12, 2008 at 11:04 pm

    Gravatar

    >> Microsoft pays money to DEECD as to promote a computer that is preloaded with their software. As a result, the machine running with Windows is cheaper than the lower spec machine running GNU/Linux. Therefore, Microsoft is doing dirty deals against GNU/Linux?

    Bob, you aren’t necessarily incorrect, so are you suggesting that Microsoft is trying to help Linux? Does this mean Ballmer flipped? Is that your question.. if the last chair Ballmer mishandled hit and scrambled his noggin because now he is doing good things for Linux?

    The issue is preservation of the monopoly levers. Monopolists would more often than not dump strategic products below cost to keep competitors out if it weren’t for the risks of being taken to court by the government (or consumers) for violations of antitrust laws.

    >> Why does it matter that GNU/Linux is more expensive than Windows?

    One problem is that many people do not want to support the Microsoft Monopolies since a higher price suggests that OEMs are giving Microsoft some or all of the extra money from Linux sales. In exchange, Microsoft might not damage their existing business with that particular OEM or might actually improve it.

    I haven’t read the article yet but while Microsoft can certainly pay OEM’s in some cases, the payment likely comes through savings on other MS products or partnerships, so that Microsoft does in effect still make money on these transactions.

    In short, Microsoft’s monopolies (note that monopoly doesn’t mean 100.0%) and existing business dealings with the OEMs means that even 10,000,000 Linux sales are not enough in some cases for the OEMs to risk getting Microsoft angry who would instead help their competitors while leaving the targeted OEM in the cold.

    The good news is that overall Microsoft *might be* (see next paragraph) spending more money than otherwise, and this taxes their ability to preserve their control; however, if it weren’t that there are many FOSS contributions done by volunteers or paid by distributed entities, “Linux” would have gone out of business already. That is how Microsoft has eliminated many competitors in the past, but they have yet to succeed in eliminating Linux (Linux is actually much stronger today than 5 years ago). Consumers have hurt every time Microsoft has succeeded. Wouldn’t you prefer that all Windows XP and MS Office licenses cost between $0 and $50 instead of several hundred USD?

    Microsoft has some special abilities. Just like paper money loses its value through inflation, the partnerships with MS lose their value over time and must be renewed. This is because Microsoft continually changes their software and because they are constantly acquiring new exclusive information (for example, because the software they control and which phones home information is so pervasive through many different industries). They sell access to this information. Anyone that falls out of favor (doesn’t pay) can find that key information has changed and they were kept out of the loop while their competitors are now moving ahead. In some cases, this “information” can be revealed indirectly through custom libraries, tools, or apps Microsoft can build and/or update online for the specific client. Microsoft is thus minting money through their monopoly backed closed source secrets. Don’t get with the MS program and you stop receiving the same access you were used to receiving. Either the old stuff can change so that you lose existing access/info, or it can become less valuable relative to the newer stuff (inflation). There are other businesses in other industries that have these powers to some degree, but having a monopoly and the simplicity by which changes can be made to software make Microsoft’s levers particularly powerful. Microsoft, for example, doesn’t have to create valuable and creative content or deplete limited mineral resources. Effectively, they just have to press the “scramble” button for the targeted clients. [I'll let the reader ponder on the wide range of possibilities and specific mechanisms.]

  4. Roy Schestowitz said,

    September 13, 2008 at 12:39 am

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    bob,

    See who is actually paying for that discount, It’s subsidized by the taxpayers if I read this correctly. The deal with the government has the citizens pass a healthy money flow to Microsoft for the ‘privilege’ to harm Free software.

  5. Chris Lees said,

    September 13, 2008 at 6:58 am

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    So giving away your software for free, after rebate, is a dirty trick?

    OMG, I must be one of Microsoft’s “proxys”!

  6. Chris Lees said,

    September 13, 2008 at 7:08 am

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    P.S. I have some very important information you should pass onto your readers: Electrolux Home Products is conducting a similar dirty trick by giving its customers $150 cashback on some of its washers! It’s an evil strike to try and put Fisher & Paykel and Whirlpool out of business! Electrical retailers are working as an Electrolux proxy!

  7. Jose_X said,

    September 13, 2008 at 8:29 am

    Gravatar

    Chris, you completely missed the part about monopolies. Go ask around why monopolies are treated differently in the eyes of the law than are other market players.

    Think of it as this way, you are a talented but defiant singer and you just said “screw you” to the last person that contracted you because of their foolishness and greed. Two years later, you have gone to every shop in town but no one has hired you despite your skills. It turns out that the owner you told off is the only liquor supplier in the whole city, and he made it clear that you were not going to sing anywhere.

    How many bars or taverns do you think will defy their liquor supplier and hire you?

    [Note, instead of a singer, maybe you "are" a competing type of drink that the liquor supplier finds threatening.]

    It takes time to crack a monopoly. Linux has not been obliterated because it is subsidized by many who commit their small contributions; it has a terrific value proposition; and there are some very business, developer, and user -friendly FOSS licenses keeping everything together (eg, the GPL).

    At some point, even with a low market share, Linux may stand out so much and would have such a good answer to all the main obstacles, that vendors everywhere will be able to defy Microsoft, telling MS to shove… without fear of reprisal because the vendors at that point will be willing to risk never being able to sell Monopolyware competitively again.

  8. Roy Schestowitz said,

    September 13, 2008 at 9:24 am

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    Chris,

    You obviously ignore the role of the government here. This is not private business; it’s public sector.

  9. Chris Lees said,

    September 14, 2008 at 4:49 am

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    Microsoft does not have a monopoly. What operating system are you using? The whole article depends on the existence of the Linux-based computers. Yes, Microsoft would like to be a monopoly, but they are not one. In this instance they are not spreading FUD or bullying people into buying Microsoft software; they are merely offering a cashback for products bought.

    In this case, the public sector is merely passing on lower costs afforded to it by the supplier (Microsoft). Effectively, Microsoft is giving the school a cashback.

    The bars and taverns analogy is not true, because there are plenty of taverns around that serve Microsoft and GNU/Linux beer. There are taverns around that don’t serve ANY Microsoft beer.

  10. Roy Schestowitz said,

    September 14, 2008 at 4:58 am

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    Microsoft is not a monopoly?!?! Even he United States government disagrees with you, despite the fact that it’s corrupted by Microsoft affiliates.

  11. AlexH said,

    September 14, 2008 at 5:05 am

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    @Chris: “monopoly” doesn’t mean “sole supplier”. You can have 55% of a market and still be a monopoly (see, for example, transatlantic air-travel) – it’s not that straightforward.

    I think there is a point in there that’s relevant, though: Australia aren’t the only people who’ve bought Windows in bulk. In that scenario, where you’ve effectively bought a large number of licenses, you’re saving a lot of money.

    The problem free software has is that to move from Windows to another OS means giving up that discount, so it does actually become more expensive in the interim.

    There’s not an awful lot we can do about that, unfortunately.

  12. Robert Millan said,

    September 14, 2008 at 12:14 pm

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    > Doesn’t a greater price mean the product is more valuable?

    Not when its marginal cost is zero. Under “normal” market conditions, a price higher than zero for such a product class is an anomaly.

  13. Jose_X said,

    September 14, 2008 at 10:18 pm

    Gravatar

    Chris, the courts have tests they use to determine if various anti-trust laws apply.

    To return to the example I gave, what if that person isn’t the sole supplier but he supplies 80% of the drinks that people want. The customers may want those drinks because they are hooked on the taste or buzz of that specific brand of drinks; however, a better analogy to depict software lock-in would be a strong drug with a specific “high” sought by 80% of the clientele.

    Who can afford to take a serious hit on 80% of their business? Some vendors do because they are only in the business of serving a small segment not part of the 80%. Most of these, though, do not provide as low a price because of fewer efficiencies of scale. Ie, the big boys, with the lower prices for commodity items, are the ones most sensitive to issues that affect the majority of a market.

    ["Market" can be defined from context.. sometimes it's rather small and other times it includes a much larger entity. We can speak of the Linux vs the Windows market or we can talk about the PC market or even the Australian XXX market. .. I'm most definitely not an expert in (US or any other) antitrust law.]

    AlexH,

    >> I think there is a point in there that’s relevant, though: Australia aren’t the only people who’ve bought Windows in bulk. In that scenario, where you’ve effectively bought a large number of licenses, you’re saving a lot of money.

    It all sounds ordinary if we remove the monopoly factor. With monopoly control, Microsoft has a wide range of prices they can charge. By raising prices in one area, they can subsidize elsewhere where a particularly strong competitive threat exists.

    Microsoft has to fight, there is no doubt, but they are in too strong of a position. Lawmakers have decided that no single company or group conspiring together should be allowed that much influence in a market since long term that is detrimental to consumers and maybe even to the whole economy.

    There are many issues, but Microsoft is actively working on contracts to bump Linux out. This is good for those wanting Windows, but it sucks for the rest of us (including users that would prefer Linux if they had it as a fair option).

  14. Roy Schestowitz said,

    September 15, 2008 at 1:26 am

    Gravatar

    This new one might be of interest:

    “The U.S. Department of Justice’s yearlong study of the state of competition and monopoly law has produced conclusions that may be put to the test in the department’s analysis of objections to the Yahoo-Google ad sharing deal.”

    It’s a PDF file:

    http://www.usdoj.gov/atr/public/reports/236681.pdf

  15. Lachlan said,

    September 15, 2008 at 2:21 am

    Gravatar

    ok now it is time for somebody of whom this affects to speak. and yes this does affect me. i am and Australian who lives in melbourne the capital of the state of Victoria. i also pay tax – i have a part time job, and am a student though my school will be getting the laptops next year and this is my last though my younger brother will be using the laptops.

    people please look at this through perspective. even if the laptops were priced correctly schools would still buy the windows ones, i have talked to my schools IT department and was told so. most school IT admins only know windows so it is all they will use, most school students only know windows teaching time will have to be replaced with teaching staff and students how to use linux and OSS now suddenly a program made to make students learning better by the assistance of computers will become a hinderance as they must learn to use linux (trust me everybody will complain and need to be taught as the whole school complained when office 07 was installed and looked different). schools will be taking this very serious as education has just been put under the spotlight as the prime minister has just ordered schools to be ranked and Victoria will not risk going bad in ranking meaning schools will probably pay for windows so students can focus on things they will be tested on.

    for me research on this look into Kevin Rudds “education revolution” and how a laptop has been promised for every student yet he forgot to budget for software and support, from what i remember this software and support par was equal to around 1 billion australian dollars.

    now i am all for the promotion of linux and OSS but just remember this change will come slowly and now is not the time for it, microsofts monopoly will fall with then rise of not linux but linux and mac. or maybe mac and then the emergence of a strong OSS culture.

  16. Roy Schestowitz said,

    September 15, 2008 at 2:26 am

    Gravatar

    Lachlan,

    What learning does an environment like Linpus actually require? There’s this myth around “training” and one example is the transition from Office to OpenOffice.org, as opposed to say… Office 2007 with the Ribbon.

  17. Jose_X said,

    September 15, 2008 at 8:20 am

    Gravatar

    Lachlan, you should look around the web. There are many cases of schools that have switched to Linux and the kids have not noticed and even started to like it more than Windows over time. The same thing has happened in households when Linux was set up nicely (as could be done more frequently if more OEMs put their minds behind it). I think you are a bit nervous over something with which you really don’t have too much experience (or had a negative one).

    As RS just mentioned, moving from MSO of a few years ago to OO.o (newest version) is easier than moving to MSO2007. Many have said this (I haven’t tried MSO2007).

    In any case, there is nothing to get nervous about. Pilot programs would be done.

    But the problem discussed above wasn’t about people being forced Linux as they have been forced Windows for ages. The problem was that there are people that WANT LINUX TODAY OVER WINDOWS but are being denied.

    Linux hasn’t done anything wrong. It’s the vendors working to keep it even off the hands of those that want it and/or know how to use it in a friendly setup.

    Also, it will be a cold day in hell before a lot of FOSS developers decide to voluntarily abandon Linux in order to move their game over to Apple. Manage FOSS through Apple.. sure, that’s worse than what Novell is currently doing. I hope Apple is not planning on wasting time on such a push.

  18. Roy Schestowitz said,

    September 15, 2008 at 8:27 am

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    Also, it will be a cold day in hell before a lot of FOSS developers decide to voluntarily abandon Linux in order to move their game over to Apple. Manage FOSS through Apple.. sure, that’s worse than what Novell is currently doing. I hope Apple is not planning on wasting time on such a push.

    Actually, this problem already exists among Mono developers.

    http://www.theregister.co.uk/2008/07/16/gnome_gtk_de_icaza/
    http://tirania.org/blog/archive/2005/Dec-28.html

  19. Jose_X said,

    September 15, 2008 at 8:36 am

    Gravatar

    >> for me research on this look into Kevin Rudds “education revolution” and how a laptop has been promised for every student yet he forgot to budget for software and support, from what i remember this software and support par was equal to around 1 billion australian dollars.

    Considering that the money is being put into the local economy for education purposes, that is actually not that much money. Look at the costs involved just in a few cases of Microsoft software Vulnerabilities Exposed TM. There are huge costs for Windows.. including for training. You should also mention training needed for Windows Latest and Greatest TM.

    AND, Linux education will pay dividends for a lifetime for the students and teachers involved. Linux environments are open to experimenting and customizing to your needs. With Linux there will actually be some extra learning that the teachers will receive free from the students as the students learn. Linux is a much nicer environment for learning. Microsoft fears it for good reason.

    AND result in savings for years to come. Huge licensing savings year after year after year. [Not just for the OS, but for application after application] Hey, Linux development tools are free! In no time, students will be extending and creating new software for their own use. When one bright kid discovers something, it will be used in their school and everywhere else if desired. Plus, at a lower level, not just the brightest will be able to contribute. It’s amazing what a small number of changes can do to change a program. Over time kids and teachers and outsiders will provide these sorts of tips and tricks.

    >> This new one might be of interest [link provided to story dated Sept 15]
    >> “The U.S. Department of Justice’s yearlong study of the state of competition and monopoly law has produced conclusions that may be put to the test in the department’s analysis of objections to the Yahoo-Google ad sharing deal.”

    Talk about fresh off the press and timely for this discussion!

  20. Roy Schestowitz said,

    September 15, 2008 at 8:56 am

    Gravatar

    A lot of the points you raised (and more) are already described nicely in:

    http://www.gnu.org/philosophy/schools.html

    For schools not to educate children (and rely on what they already know) is to miss the goal of education and offer no skills or methods. I was personally introduced to GNU/Linux when I was 18 and newly enrolled.

  21. Jose_X said,

    September 15, 2008 at 9:11 am

    Gravatar

    >> http://www.theregister.co.uk/2008/07/16/gnome_gtk_de_icaza/

    When I first heard about this, I though Miguel was worried about having his code removed. I figured the push was something of a backlash against Novell. Naturally, this change in Apple’s direction would weaken Novell’s hand with Microsoft (there would be bridges to bypass Novell’s). Novell would love to take up the spot Sun has with Java, now they have to worry about more x-platform items doing a run-around them.

    I think there is much more fun to come over the years as Linux gets adopted by more developers. There is so much that can be done with it.

    Also, I am generally looking towards other interfaces besides the big two (Gnome/KDE). For custom presentations, you want simplicity and would take any corresponding reduction in bloat and increase in speed. [For desktop use, I am currently using KDE, but I am talking about moving into the future with throw-away distros in mind: useful for limited purposes.. eg, to help you learn how to use various apps or learn a useful skill or get introduced to something (companies would love the latter for their clients).]

    >> http://tirania.org/blog/archive/2005/Dec-28.html

    The same story we have gone over with Java in terms of performance and savings in developer time. There is truth and some wishful thinking as well. These environments are sold to businesses as productivity enhancers as well as privacy enhancers. Most of the FOSS world though does tremendous sharing (not reinventing the wheel arbitrarily across the board but designing much more as a community) and provides source code useful in recompilation; thus, some of these benefits of Java and dotnet disappear, making the negatives a bit clearer.

    With FOSS, everyone innovates and has a shot at the “standard”.. You use the best tool you need. In particular, limiting yourself to dotnet means you hand over a lot of decisions to Microsoft as well as to the mono clan. Microsoft works their stuff in the dark. They make key decisions for everyone by themselves. Meanwhile, mono works by permission of Microsoft and based on what Microsoft strategically shows them. Long term, I have more faith in Parrot Virtual Machine than over dotnet and even over Java and over one language VM implementations.

    I am not writing off Java or dotnet, just saying that the environment under which they were created and for which they were optimized was outside of how FOSS works. Rather the new “revolution” will be FOSS and its style spreading far and wide.. not just to developers desktops but to “end” users. “End” users will benefit from access to source code.. trust me.

    Let me repeat, I think FOSS gains from Java and something like dotnet, but the gains are more measured and don’t replace many existing scenarios. You really do want to code in C or equiv for a lot of infrastructure. And “infrastructure” will span more and more over time since really you only need Java and such for the “last mile”.

    [Infrastructure has a higher requirement for transparency and many times libraries are coded specifically to solve the problem (for performance or similar).]

    BTW, just went back to the article to read some more and came to the following sell:
    >> The language and runtime choice is a tradeoff that developers make. A balance between the time available for releasing the product; the budget available for creating and maintaining the application; the target system requirements; any third party libraries and components required; the in-house expertise; availability of developers with knowledge to develop and maintain the code; language learnability; the project life-span and the requirements that it might impose on the project: from languages designed to maintain software over a large period of time to write-once, barely-touch-afterwards software.

    FOSS is changing the way the game is played. We have the “time” and “budget” to do things well for everyone’s use. Businesses and users that discover sharing will also realize there is a better way than optimizing within your own limited sandbox.

  22. Jose_X said,

    September 15, 2008 at 9:24 am

    Gravatar

    >> A lot of the points you raised (and more) are already described nicely in:
    >> http://www.gnu.org/philosophy/schools.html
    >> For schools not to educate children (and rely on what they already know) is to miss the goal of education and offer no skills or methods. I was personally introduced to GNU/Linux when I was 18 and newly enrolled.

    Thanks for the link. I did not want to talk about FOSS benefits to schools too much because I have read others make the case very well, and they can be found online here and there [you presented one such nice selection], sometimes giving an account with specific details of student experiences.

    I still am partially in shock that OLPC would even consider Windows.

  23. Roy Schestowitz said,

    September 15, 2008 at 9:28 am

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    OLPC got slogged by Intel and Microsoft.

  24. Craig Cooper said,

    September 16, 2008 at 11:51 pm

    Gravatar

    M$, up to their old tricks again. I guess when you get that big – the only way you can go is down…

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