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Microsoft Blast from the Past: Blackmail

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OME time in the past we mentioned Microsoft's and Bill Gates' blackmail in Kenya and in Denmark, respectively. Microsoft denies both allegations, but then again, Microsoft also denied financial wrongdoings, only later to see a conviction, with a former manager ending up in prison for financial fraud.

After some joyful searching, we pinned down the following old story.

The people who run this city recently heard a familiar pitch from Microsoft: Sign up for a multiyear, $12 million software licensing plan or face an audit exposing the city's use of software it hadn't paid for.

[...]

Bullied by Microsoft?



Piper had other things on his mind. Awaiting him in Houston was a new contract Microsoft wanted him to sign. The software giant had recently announced a plan, referred to as "Software Assurance," to get more companies and agencies to upgrade to Office and other software every two to three years instead of a more typical four years or more. Almost 50% of companies upgrade software every four years or more vs. 23% every two years, said a 2002 survey of 1,500 companies by The Yankee Group research firm.

Microsoft set fall 2001 as a deadline for customers to sign up. Those who did would pay $239 to $380 per copy for Office XP, the latest version.

Those who passed would pay $479 a copy when they did upgrade.

Microsoft says the plan cuts software costs and improves service. That's especially true for companies that upgrade every three years — typically bigger companies. But research firms Gartner and Yankee say the plan will raise costs for companies that upgrade less often, usually medium and smaller ones.

With no viable Office alternatives, some companies, like the 25-member Clendon Feeney law firm in Wellington, New Zealand, felt bullied.

"Microsoft gets nice, steady cash flow from their big users, and then they get the real cherry on the cake when all the businesses who choose not to upgrade now have to go out and buy at full price later," says managing partner Craig Horrocks.

Microsoft also sent letters to 500 school districts in 30 states giving them 60 days to produce receipts accounting for every copy of Microsoft software being used. Failure to do so could result in an audit and penalties, the letters warned. In the same envelope came a sales brochure about the new licenses.


Mind the role of the Yankee Group and the Gartner Group. We complained about this pair only yesterday.

In addition, worth pointing out is the uncompetitive tool called "Software Assurance." It's similar to Memoranda of Understanding, which we wrote about many times before. Posts about this include:



Business strategy, often characterised by ruthlessness, is one of Microsoft's reasons for so-called 'success'. It was rarely about technical merits, so the famous essay "How to Become As Rich As Bill Gates" truly fits well here.

"Life is not fair, get used to it."

--Bill Gates

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