Microsoft Loses in Houston

Brian John

Recently, Microsoft has been pushing new licensing plans on several businesses, organizations, and even cities. In January, Microsoft told Houston, TX that it must buy a $12 million multi-year software licensing plan for Office, or it would be audited and fined for each piece of software which it could not produce a license for. A Microsoft sales representative claimed that the city owed $1.1 million for unlicensed software being used by city workers. Microsoft even went so far as to claim that the Houston Public Library was short 450 Office licenses. However, Houston was able to produce proof that they had licenses for every piece of software in the library. This would include 111 copies of Office donated by Bill Gates’ charity foundation.

The multi-year plan offered to most organizations by Microsoft is to sign up for something called "Software Assurance". This would allow the particular organization to buy Office XP (the newest version) at a price of $239 to $380 per copy instead of the normal price of $479. This plan would save money for a company providing they upgrade every three years. Many organizations don’t upgrade that often, and would be forced to pay the normal price.

Houston did not see Microsoft’s "offer" as a fair and viable solution. Instead of continuing to use Microsoft Office, they struck a deal with a little-known competitor called SimDesk. SimDesk is an Internet-based application similar to Office, but not quite as complex or powerful, and is offered at a fraction of Microsoft’s price. Houston signed a $9.5 million, five-year deal with the competitor.

There are two major parts to this contract. First, Houston will put SimDesk on at least half of the 13,000 PC’s used by its workers. Second, SimDesk will be available to all residents with a library card, up to three million possible users. Compared with Office, this is a significantly reduced price tag and Houston is confident that it will be a viable alternative.

Houston isn’t the only one contemplating a deal with Simdesk. Chicago recently agreed to a pilot program with the software. SimDesk reports that they have also begun talks with Los Angeles and the government of Brazil.

In addition to Houston, other cities and organizations have been offered similar deals by Microsoft. Several have complied, but at first so many of them were reluctant that Microsoft pushed back the deadline to sign the deal three times, to August 2002. Microsoft even sent letters to 500 school districts allowing them 60 days to produce licensing for every piece of Microsoft software that they are using. If they do not comply, they could be audited and penalized.

Will SimDesk be a viable contender to Microsoft, or will they be crushed like many companies before them? I guess we’ll just have to wait and see. CC