[Solar-general] Israel, la disputa contunua

[Diego Saravia]

http://www.haaretz.com/hasen/spages/380201.html


Suddenly, competition is in

By Yuval Dror

In recent weeks, readers of the papers' business sections have been keeping
tabs on a fierce battle between the Finance Ministry and Microsoft. The
Finance Ministry announced that it will start distributing packages of
open-code office software ("Open Office") to all citizens free. In parallel,
the ministry declared that it will stop purchasing Microsoft programs.
Instead, it will switch to Windows' venerable competitor and install Linux
programs.
In response, Microsoft hinted that the decision was motivated by a desire to
grab headlines: Finance Ministry officials were applauded in Israel and around
the world for their courage.

The real reason for the dispute was virtually ignored. In early 2001, the
Finance Ministry signed a three-year deal with Microsoft under which the state
of Israel received extremely favorable terms. The state received a package of
programs that included an operating system, office programs, an electronic
mail server and a number of additional programs, at the astounding price of
$177 per package (including VAT). Were the state to have purchased each of
these programs separately, it would have paid a much higher fee.

Microsoft was also pleased. Its new contracts are built so that organizational
clients rent programs rather than purchasing them. During the rental period,
Microsoft upgrades the programs for no charge. Microsoft was convinced that it
had killed two birds with one stone: First, the Finance Ministry would have to
continually renew its rental agreement so as to retain the computer programs.
Second, Microsoft believed that it had out-muscled competitors, because under
this agreement, it offered individual programs at rock-bottom prices that
could not be matched by any rival.

Three years later, the Finance Ministry has changed the rules of the game. It
capitalized on a clause in its contract with Microsoft that gives it the right
to convert the temporary rental agreement into a permanent arrangement by
purchasing the programs it possesses. Finance Ministry officials explained
that this approach is more cost-effective and logical: "We don't think that we
will need new programs until 2007," they said. "At that time, either there
will be new solutions based on open code, or Microsoft will come to us on its
knees, and offer a better deal."

But the connection between open-code software and the dispute with Microsoft
is tenuous. The treasury began investing in open code more than a year and a
half ago, when its relations with Microsoft were still smooth. Now, entangled
in a dispute with the giant, the Finance Ministry is enjoying kicking
Microsoft where it hurts, even though it really has no real intention of
replacing Windows with Linux, or Office with Open Office.

Microsoft officials are also acting as though the focal point of the dispute
is the Finance Ministry's "intention" to choose open-code software, even
though they know that the ministry's threat is nothing more than a bluff and a
public relations stunt. Microsoft prefers to engage in a virtual argument
because it wants to deflect the public's attention away from the truly
important issue: The Finance Ministry has decided that Microsoft's business
model simply does not pay.

Microsoft's success depends upon this model. It is based on an understanding
that there is no way to persuade clients to toss away programs they have
purchased every 18 months or so just so that they can purchase improved
software. Microsoft therefore offers organizations a deal that frees them from
this obligation: Don't buy the programs, it tells clients, rent them. Such an
arrangement, however, puts the client onto a slippery slope.

If other governments also decide that the business model offered by Microsoft
is a bad deal, the company will sustain a tough blow. That is the reason why
international media outlets are lavishing such extensive coverage on this battle.

Microsoft officials point out that 60 organizations in Israel have renewed
their contracts with the company, but the Finance Ministry prefers to prattle
about open code so as to win media publicity. What the ministry is not
mentioning, however, is that it has enjoyed ridiculously favorable terms for
the past three years. Instead of issuing tenders and inviting companies to
compete for software supply contracts, the state received computer programs in
a prearranged deal, without a tender and without competition. But now, the
Finance Ministry is suddenly boasting about its commitment to competition.
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-- 
Diego Saravia 
dsa en unsa.edu.ar