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[discuss] OOo and Linux OUTSELLS Microsoft in Thailand!
Mon, 18 Aug 2003 16:07:43 -0700
Here it is, boys and girls, the tipping point. Gandhi Con 4. (First
they ignore you, then they laugh at you, then they fight you, then you
In at least one market, Thailand, FLOSS has forced MS to actually
compete for sales ON THE DESKTOP!!! See the Wall Street Journal
article below from Thursday, August 14, page B1.
For a long time now, I (and lots of others) have believed that the
price of Windows and Office has been artificially inflated due to the
fact that MS has a monopoly on the desktop. Many people I speak to
about FLOSS feel that it is almost inevitable that they must use
As a lawyer, I would love to use lawyer-specialized products for
calendaring and preparing legal documents, but those products simply
aren't available. It's a chicken and egg question. Vendors won't
make applications for Linux because there's not enough demand.
Lawyers won't use Linux because there's not enough applications.
The only way for us to beat this chicken and egg question is for FLOSS
to reach the tipping point in our market.
I have been wondering how it would be possible for FLOSS to actually
attain sufficient market penetration to force MS to actually compete
fairly on the desktop. What would desktop competition look like? How
would we know when the tipping point will be reached? What is the
actual fair market value (FMV) of Windows and Office?
Know we know. The FMV of Windows and Office is $36.00, combined.
Everything over that is gouging by MS. The tipping point will be
reached gradually, market by market. MS underbid FLOSS in Munich, but
FLOSS won the contract. Tipping point reached. MS was forced to drop
the price of Windows and Office to $36 in Thailand because it was the
only way they could compete. Tipping point reached.
Andrew McBean of the MS subsidiary for Thailand is quoted in this
article as saying that the discount of $36 is "relatively unique..."
In other words, MS will drop the price of Windows and Office to the
FMV of $36.00 if, and only if, they are forced to compete. That's
what was "unique" about Thailand, and what as "unique" about Munich.
By the way, all this is quite recent news, only coming in May and July
of this year. It's been a hard spring and summer for MS. Here's the
Note: I modified this WSJ article by adding comments in brackets like
this: [blah blah blah]. Comments in brackets are mine only, and do
necessarily reflect the views of the WSJ, Rebecca Buckman, or any one
other than myself.
Face - Off Over People's PCs
Microsoft Discounts Software In Thailand to Battle Linux In Cheap
BY REBECCA BUCKMAN
FACTORY worker Chom Booncharoen doesn't know much about e-mail or the
Internet. But he jumped recently at the chance to buy a cheap computer
through a spcial program created by Thailand's government. His new
machine runs on free Linux software instead of the Microsoft Corp.
software that powers most computers world-wide. "I pay by cash," says
Mr. Chom, 56 years old, gazing approvingly at the slick new machine
sitting in his living room, beneath two photos of Thailand's king and
queen. Mr. Chom's two-story house, off an alley in a Bangkok suburb,
seems anunlikely place for a high-stakes battle in the war for software
market share. Yet Mr. Chom's participation in the new Thai
computerprogram which has sent about 50,000 PCs to ordinary citizens so
far and aims to deliver a million by the end of next year-highlights
potential for free, "open source" software like Linux to spread in the
Unlike Microsoft's Windows software, open-source
technology can be downloaded free off the Internet, where it is
maintained and constantly improved by a network of programmers around
That makes it especially attractive to governments in poorer
countries, which are trying to bring their citizens online but are
loath to pay Microsoft's hefty fees. Hence Thailand's program, which
could represent a significant threat to Microsoft's dominance if copied
by other governments in the developing world. Microsoft knows this,
analysts and others close to the company say. That's why the Redmond,
Wash., company took the highly unusual step of slashing the price of
cash-cow Windows and Office software so it could participate in the
government program. Participants now have the choice of ordering a
Linux powered computer for about $260 or a Microsoft machine for about
That means Microsoft is offering Thai versions of Windows and Office
about $36 combined; Office alone can retail in the U.S. for 10 times
that much. Microsoft says it charges less for software when it comes
pre-installed on computers for corporate or educational customers.
[Okay, so this means that MS must really be overcharging those of us in
the U.S.!!! In fact, Barron's weekly for 6/30/03 shows that MS has an
operating profit of 82% and 78% respectively for its Windows and Office
units! Where it is forced to compete, MS can't really make that much
profit on its software, which is why MS has recently identified a weak
economy and FLOSS as its number one and two threats to productivity].
Microsoft recently has given away Office software to poor schools
the globe and offered deep discounts for big government contracts. But
analysts don't believe Microsoft has ever before cut its prices for
regular consumers to the extent it is quietly doing in Thailand. "It's
relatively unique project," acknowledges Andrew McBean, the general
manager for Microsoft's Thai subsidiary.
[To me, McBean's comments are such hilarious examples of double-speak.
MS is afraid of competition, but it can't acknowledge its fear of
competition, because that would be tantamount to acknowledging that it
is a monopoly, which it has always denied].
Mr. McBean says he knows of no
other Microsoft plans to heavily discount its consumer software in
countries. But technology experts say the company may have little
choice, now that it has set a precedent in Thailand. "Basically,
being forced into a corner," says Gartner Inc. research analyst Dion
Microsoft was caught off-guard by the Thai project, the
brainchild of Thailand's new minister for information and
technology, Surapong Suebwonglee. Mr. Surapong got the idea for selling
powerful but cheap PCs to first-time users late last year, he says,
after he read a newspaper article that U.S. retailer Wal-Mart Stores
Inc. was selling computers for $199 on the company's Web site.
Surapong set up a meeting with the Association of Thai Computer
Manufacturers, a trade group, and asked them, "Why don't all of you
your PCs for this price?" he recalls in an interview.
It wasn't quite
that simple. The Linux-powered Wal-Mart computers, Mr. Surapong soon
discovered, didn't include monitors and had only tiny hard drives. But
after a couple of months of wrangling, the minister worked out a deal:
The Thai government would guarantee sales of more than 100,000
with spiffy monitors and bulkier hard drives, if the computer
association's members could sell them for 10,900 Thai baht, or around
$260. The government offered to take care of ongoing service and
maintenance and provide free delivery for the machines. People getting
"People's PC" pick it up at their local post office.
About 14 Thai PC
makers started building the bare-bones machines, which sport Celeron
processors from Intel Corp., a 20-gigabyte hard drive and Linux-based
office software, including word processing. "Everyone worked very hard
and very fast," says Pisit Perksanusak, the computer association's
president and an official with Thailand's Belta Computer co.
Microsoft. The company's Mr. McBean didn't know much about the PC
project until early May, when he read a newspaper article about it. Mr.
McBean hadn't even officially taken over as Microsoft's Thailand chief,
a job that had been vacant for more than a month. He immediately set up
a meeting with Mr. Surapong.
A few days later, an estimated 30,000 Thais
lined up outside Bangkok's main convention center to sign up for the
low-cost Linux computers. By the time Microsoft met with Mr. Surapong,
it was clear demand for the machines was high. When Microsoft asked if
it could participate, "I said, 'if your costs are very 14 low, it's
possible,"' recalls the minister.
Microsoft met Mr. Surapong's low-price
de mand, at $36. Then, it scrambled to make a Tha version of its
XP Home software in time for the first shipment of computers, scheduled
for July. That meant translating programs like its Internet Explorer
browser and it Windows Media Player into-Thai, and also corn ing up
new licensing agreements and au thentication certificates for the
People's PC computers, Mr. McBean says.
Microsoft even paid for a
mailing fron the Thai government, informing people who had already
signed up for a People's PC than they could pay extra for a
Microsoft-powered computer instead. If a computer has already been
shipped, and its new ownel requested Microsoft software, Microsoft got
permission for its hardware partners k open up the computer on
government property and install its own software, according to Mr.
McBean. Microsoft even did away with the controversial "product
activation' feature of its software, which requires people to
register the product.
Of the 134,000 desktop PCs ordered so far, according to the computer
association's Mr. Pisit, somewhere between 20,000 and 25,000 have been
outfitted with Windows and Office, as opposed to Linux. Mr. MeBean puts
the number at about 33,000. More computers will go on sale later this
The Thai government has had more trouble getting computer
companies to build an acceptable laptop version for its target price of
19,500 baht, or about $465, but it is moving forward with a laptop
program for consumers and government employees. And it is unclear if
governmentwhich has launched several other populist initiatives to try
to lift Thai people out of poverty-will meet its lofty goal of selling
million consumer laptops.
Mr. McBean denies Microsoft is going to such
lengths in Thailand because it is worried about Linux. The company
simply believes "it's the right thing to do for users " he says, adding
that Microsoft is now developing specially tailored Thai software
to first-time computer users.
[ Another beautiful McBean double-speak. Isn't it nice that MS is so
concerned about their users? Why are they not concerned about us in
the U.S.? Why are they willing to gouge us? Because their advertising
machine in the US has us convinced we just GOTTA have MS.]
He adds that many of the Linux computers
sold under the program will probably be outfitted with pirated,
illegally obtained copies of Windows anyway. Indeed, when Mr. Chom, the
retired factory worker, booted up his machine recently for a visitor,
the screen glowed with the familiar logo for Microsoft's Windows 98
software. He said a friend of his daughter's had installed it for him,
though he also intends to learn Linux.
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