Microsoft: Love and Hate on the College Campus
Microsoft’s intimate relationship with the college campus may be the only great competitive strategy for which Bill Gates is not under federal scrutiny.
College campuses account for about 3 percent of Microsoft’s business, a paltry amount compared to the home and office market. But higher education wields a greater influence over Microsoft than can be measured in mere dollars. And you don’t need to be told about Microsoft’s significance to your college campus. Look to your left and look to your right–you are bound to see a Microsoft product on almost every computer on your campus.
For years, Microsoft has ensured its dominance of the higher-education market by discounting and giving away its products to college users, and it’s not just out of a sense of community spirit. Most of those using Windows or Explorer don’t stay on campus–they graduate and get jobs and get promoted and become decision-makers. When it comes time to choose an operating system or office software, they choose what they know. That tendency to choose Microsoft products is no accidental product of human nature. Schools have limited resources and Microsoft wants access to their captive audience.
“Clearly, we see the products of higher education being key contributors to the knowledge economy,” Toby Richards, director of Microsoft’s higher-education marketing group, said. “Heck, we love it when they run our applications out into the workforce.”
But that neat symbiosis may soon be thrown off kilter.
Following an anti-trust lawsuit by the U.S. Department of Justice and 19 states, Judge Thomas Penfield Jackson determined that Microsoft had maintained an illegal monopoly on the software market through unfair and anti-competitive practices. In early June, Jackson ordered that Microsoft be split into two separate companies–one that would market the popular Windows operating system and another that would sell its Office software such as Word and Excel.
Microsoft executives have always maintained that having their products on the vast majority of personal computers is just a testament to the quality of their software. They say they can’t help it if everyone wants to use Windows and they certainly shouldn’t be prosecuted for it.
“While we respect the government’s concerns, we believe the courts ultimately will reaffirm that Microsoft has competed aggressively but fairly and that our actions have benefited consumers and advanced innovation in the software industry,” Mark Murray, director of public affairs, said. Company officials have said they will fight the plan to break-up the company, now and on appeal.
Meanwhile, consumers everywhere already are wondering what the impact of a break-up will be. No one knows exactly how a new incarnation of Microsoft might affect higher education. More competition could mean lower prices–or it could mean fewer benefits for the educational market. New players in the field could lead to innovations that streamline clunky products–or they could just lead to a confusing market with lots of incompatible software.
Most college administrators and information technology professionals are adopting a wait-and-see attitude but they are not without concern.
Administrations have been scrambling for years to find the money and technological brainpower to keep up with the expectations of the savvy 18-year-olds who enroll every year.
And the technology has been changing fast enough as it is, without a potential revolution at one of the most stable elements of campus computing–Microsoft.
No one disputes that Microsoft dominates the higher-education market. Windows is the operating system, or internal software, used by more than 75 percent of the higher-education market, according to a 1998 survey by Student Monitor. Many students using other operating systems, such as Macintosh, are using Microsoft software for their word processing or Internet work.
“Frankly, the commercial software is where we make most of our revenue,” Richards said.
“But higher education is a very competitive marketplace. There are 15 million students and about 2 million faculty and staff. We need to have dedicated resources focused on higher education.”
The dominance of Microsoft in higher education actually began when it looked as if Apple was leading in the personal computing race. College students everywhere were buying relatively inexpensive (less than $2,000) Apples called Macintoshes that fit snugly on their dormroom desks. In fact, it was the Macintosh OS that introduced consumers to the idea of “windows,” an environment where they could point and click to move around the desktop. It didn’t require knowledge of any “pseudocode,” as did the more cryptic and awkward Microsoft operating system of the time, MS-DOS.
While Microsoft had already made Word the standard in word processing, it seemed as though Apple was winning the operating-system contest. But then Microsoft developed Windows, an operating system that looked like the Macintosh but was designed for the less expensive Intel-based PCs. Those who had grown so fond of the Macintosh system began to look over at their neighbors’ PCs. They looked like the Macintosh, only they seemed faster, and cheaper, and networked better. PCs became the norm, and Microsoft along with them.
To maintain that dominance, Microsoft has been giving away licenses to faculty using Microsoft products in the classroom as well as instituting pricing structures that give campuses up to an 80 percent discount off commercial prices.
Microsoft also sponsors several projects to encourage the use of its technology in the classroom, including a Web site for educators at http:// academicoop.isu.edu. “We see our role as that of enhancing the teaching and learning process with technology,” Richards said. “Of course, we prefer it to be our technology.”
In the early days, schools fretted over having to buy a separate copy of each program for each computer on its campus, while Microsoft worried that it was losing valuable money when students illegally copied software off machines in the library or computer lab.
To meet the needs of both, Microsoft created its Campus Agreement–colleges pay a reduced licensing fee proportionate to the number of faculty, staff and students they have each semester. The cost to administrations is between $20 and $50 per person annually, as opposed to about $200 per copy of the software. Schools get automatic upgrades and do not have to worry about improper use of software; students may use the software in their dorms and even after graduation; and the company makes guaranteed fees while extending its popularity to a new generation. It is a “win-win” situation, in the parlance of Microsoft employees, and educators have given it good reviews as well.
Analysts agree that higher education, unlike some personal and business consumers, has largely benefited from the ease of dealing with one mega-company for its computing needs. But it has not been without a cost. Administrators complain about having little flexibility in outfitting their offices and classrooms, because alternative products are either not compatible with Microsoft or simply don’t exist.
“The university has traditionally had a love-hate relationship with Microsoft,” Michael Zastrocky, an analyst with the Gartner Group, a technology research firm, said. “They are fearful of anything that gets too big, especially a corporation, but they flock to its products. It’s so pervasive across all campuses. They have to deal with them,”
While it was busy making its software the norm in schools and companies everywhere, Microsoft almost missed the dawning of an even greater development in computers–the Internet. Microsoft executives quickly determined that the way to capture that market was through the browser, the software that allows each computer user to surf the Web. The company then decided to package that browser with all of its operating systems and other software.
The move was once heralded as a great competitive strategy, but now a federal judge is calling it a violation of the nation’s anti-trust laws, with major consequences for the software giant. You can almost hear the sharpening of knives as everyone gathers around the titan’s carcass, preparing to carve it up in a way that best suits their need–more competition, lower prices, more innovation, less Bill Gates.
The government proposed to the judge in April that he split Microsoft into two separate companies to force its operating system and software package to compete individually and to create the possibility for new alliances with other products.
Microsoft Chairman Bill Gates has decried the proposed break-up, saying it is “not in the interest of consumers” and that it will “hurt the company’s ability to continue to innovate.”
Under the so-called “Apps and Ops” proposal, shorthand for applications and operation system, Windows would be distributed by one company while the applications, such as Word, Excel, and Internet Explorer as well as its Internet services, would reside in another company. The government is also seeking regulations that would curb Microsoft’s behavior for at least three years.
When it filed its lawsuit in 1996, the government accused Microsoft of forcing computer makers to include its programs, such as Word and Internet Explorer, in exchange for favorable rates on the dominant Windows system. But if the two sides of the business were split, they would have to secure customer loyalty on their own and would not be used together to ensure a monopoly, the government says.
Administrators Sitting Tight
Unlike the government, college information officers are not all in agreement about whether Microsoft’s dominance of the market has hurt consumers. But they do agree that a forced break-up of the company could definitely affect how they outfit their campuses with technology–they just don’t know how.
“That’s what CIOs are most fearful about,” Zastrocky said. “They’ve never been big fans of Microsoft but they are even less keen on having the government direct the company’s business and technology. A court-imposed settlement is going to be a crapshoot for consumers, especially in higher education.”
It could be a great improvement: These “Baby Bills” might compete with each other for schools’ business, which could lead to lower prices. And if the move truly allows other companies to enter the market and establish partnerships with the Baby Bills, they also might develop tools that are better suited to educational uses.
“We could definitely see more special-use products for education,” said John Savarese, consulting principal with Edutech International, a technology advisory firm.
“But even with the break-up, you have to remember that few people get really successful developing something that only applies to higher education. The higher-education environment exists within the larger world of commercial technology.”
There are also pitfalls: The software from the two separate companies may not work together as smoothly as it did in the past, as the programmers are no longer working together to form a unified package. Software that has lots of bugs can result in the need for more technical support for students and staff.
The more calls there are to the help line, the more the techies may wish for the old unified product.
And for higher education, separate companies will not necessarily mean a cost reduction. Since a separate deal would have to be negotiated with each vendor, this scenario could result in exponentially higher licensing fees. Schools reap savings now by negotiating bulk rates with a single company that serves most of their needs.
“Everyone is just imagining what this new market will be like, they are just waiting for the other shoe to drop,” said Savarese, who consults with schools on their technology needs. “It’s so vaguely defined right now, it’s hard to know exactly what’s going to happen.
“But there is so much de facto standardization of Microsoft, I don’t see any schools making any immediate change that’s going to be that drastic.”
Michael Hjerpe is at ground zero of the technological World–he is the interim information technology director at San Jose/Evergreen Community College District, located in Silicon Valley. He is just miles from where all the latest innovations in new platforms, operating systems, servers, and software are being developed. But he says that, for better or for worse, he doesn’t see his campuses switching from Microsoft anytime soon.
“I think everyone is waiting to see what happens but I personally am not that anxious,” he said.
“I know Microsoft is going to be smaller, I just don’t know how much. But I know the core products are going to remain intact.”
He manages more than 1,400 computers for a community of 20,000 students and 6,000 members of the faculty and staff. The vast majority of those computers–probably 90 percent, he estimates–are using Microsoft products. In computer science and technology classes, the penetration is complete.
His department is saving a great deal of money under Microsoft’s campus agreement, which costs less than buying a separate program for every terminal, even at academic prices. If Microsoft breaks up into smaller companies, those umbrella deals would likely end and each company would charge for the products separately. But the possibility of rising costs is not enough to make administrators like Hjerpe start thinking about using other products, such as the Linux or Be operating systems, which are available free on the Internet. Be is a free operating system designed for digital media production that is an alternative to Windows. Linux, another free operating system, is growing in popularity.
“Sure, Linux is hot right now and it would save a lot of money,’ Hjerpe said. “But then you have to think about developing software for it, and it’s not cheaper. And then there’s staff and technical support. People are comfortable with Microsoft products. Our business is to provide people with stable and reliable IT services.
“Linux could be the greatest system in the world. But if [users] don’t know how to print, if there isn’t that comfort level of expertise among the average user, it doesn’t matter. If I give them a platform that it’s in the extreme minority, that’s more expensive in the end.”
Other options include Web-based software, in which the program resides on the server of the provider and is accessed over the Internet. The consumer pays a rental fee, not unlike Microsoft’s Campus Agreement, and the cost of maintaining the hardware. Few companies providing such services have made many in-roads in the higher-education market, but Microsoft is developing products along that line as well.
“That’s where everything will be in five years anyway,” Zastrocky said.
But not everyone is a fan. Lee Burnside, a system administrator at Texas Technology University, has already moved his department to Linux and other options.
“Per seat licensing gets more expensive every year, the fraction of a computer’s cost devoted to Windows grows larger all the time and government regulators are getting harder and harder to hold off,” Burnside said.
“Microsoft’s own business practices are their worst enemy, and once the market share begins to fall and the stock price begins to waver, the slope could get very slippery indeed. The only real threat to Microsoft is, well, Microsoft.”
At the Massachusetts Institute of Technology, where Theresa Regan is the director of office computing, most administrators either use personal computers with Windows or Macintoshes. But some use networked computers, that run programs such as Unix, Linux, or platforms that school staff are developing themselves in research labs. Considering that level of innovation, Regan said no one is too worried about what Microsoft is going to do next.
“In the next fiscal year, it’s something that will probably subtly get some momentum,” Regan said. “But at this juncture, there’s no concerted effort to plan for anything. It’s not on the immediate horizon.”
But even at a technologically advanced school such as MIT, it seems unlikely that the whole campus will convert to an entirely alternative solution that doesn’t incorporate Microsoft’s products.
“We are a research university but we do have to worry about our student population,” Regan said. “They change every year. We have to worry about what our pre-freshman are using. We have to have programs that people are comfortable with.”
Like Regan, Hjerpe said he has always been uneasy with Microsoft’s dominance of the market, but he has a constituency he has to worry about.
“A lack of competition did allow them to become what they are,” Hjerpe said.
“But if people didn’t like what they had to offer, they wouldn’t be so popular. Maybe there’s been less innovation because of that, I don’t know. It’s true, it feeds on itself–people are comfortable, so schools use it, which makes another generation comfortable with it. But Microsoft has the products that people want. I don’t see that changing.”
The campuses themselves are not the only ones with a position to protect. Colleges have long been the training ground of the most successful computer products. Students are often the first to endorse popular new products. And when those students graduate, they bring their affinity to office desks and boardrooms around the world, setting the standards for desktops everywhere.
“There has always been this sense that companies are training people to go out of the university, into the business world, where they will be making decisions about what tools they want to use,” Zastrocky said. “That isn’t going to change.”
… And More Love
More than 81 percent of U.S. colleges and universities named Microsoft Corp. as the most responsive technology company, according to Microsoft press release on a recent survey by International Data Corp. The survey, part of IDC’s “State of Technology Usage in Higher Education Institutions, 1999,” examined the attitudes of technology decision-makers nationwide. IDC, based in Framingham, Mass., is a market research firm.
“As a market that spent more than $3 billion on IT in 1999 and will spend almost $5 billion by 2003, higher-education institutions will continue to challenge IT vendors to offer innovative programs, effective support and comprehensive customer-focused solutions,” Sau Lau, an IBC analyst said. “Most of the companies included in our survey have specific programs targeted at the higher-education community, but we found that Microsoft by far has the most programs, including professional development, technology planning, and grants and charity.”
The 1999 Higher Education Institution survey questioned two-and four-year colleges and universities about current and future ownership and purchases of technology. As part of its survey, IDC asked colleges and universities which companies have the best reputation for meeting the IT needs of higher education. The survey found that 81.4 percent of two- and four-year schools ranked Microsoft first.
The survey also found that Windows NT is the leading operating system in higher education, with 48 percent of the schools surveyed selecting Windows NT as their network operating system. More information about the survey is available at http://www.idc.com/
RELATED ARTICLE: Lining up for Linux
At the start of the last decade, many of us didn’t know the difference between our operating system and our word processor and we thought the word “network” referred to something on television. But as we “Luddites” enter the modern era, we are finding that there are choices and it’s not just a question of whether to buy a Mac or PC. Even the seemingly undefeatable Microsoft Windows operating system has some competition, despite what the justice department says. And the pleasant surprise is that the latest operating system on the college computing scene is absolutely free.
It’s called Linux, named after its father, Linus Torvalds, who developed the first version of the operating system in 1991 while a Finnish college student. Since then, hackers and programmers all over the planet have been expanding and refining this UNIX-based operating system. According to the wishes of Torvalds, Linux belongs to no one individual or company and is available free to anyone with an Internet connection and any computer more advanced than a 386.
Although you may never have heard of Linux, Microsoft executives and industry analysts consider it to be a serious threat to Microsoft’s server software, Windows NT, as well as to desktop systems. A recent delay in getting Windows 2000 out to customers may have sent some customers searching for other solutions such as Linux, Microsoft officials have said.
In the UNIX market, Linux has become so dominant that its competitors, such as Sun Microsystems, are now making their products more compatible. Linux and its compatible software are being distributed on computers built by Compaq, IBM, Dell and Hewlett-Packard. IBM has decided to embrace Linux on all of its server hardware product lines and to contribute more of IBM’s software and technology to the Linux development effort. Businesses and schools across the country are beginning to use the free server software to turn lowly desktop computers into advanced workstations. Companies such as Red Hat, Cobalt and VA Linux, which sell the Linux operating system and related software on CD-ROM, are having multi-million dollar initial public offerings even though annual reports have yet to report a profit.
Unlike Windows, Linux is very difficult to crash. A business professor at University of California at Los Angeles, Ivo Welch, says he ran a computer using Linux day and night for nine months straight before having to turn it off for maintenance–and it never crashed once.
“That’s probably one of the single most common comments I get from educators–they need to increase their reliability, “said Teresa Spangler, who directs higher-education marketing for Red Hat, a company that produces and markets Linux products. “A knowledgeable administrator is going to be able to have more flexibility, scalability, control, freedom, and reliability.”
Linux uses less memory and disk space than other operating systems to run itself and other programs. It has been slimmed down thanks to the programmers around the world working on the “kernel,” or core code. It allows several users to run off the same server computer, as well as enabling each user to run several applications without slowing down. It can be configured to look like Windows, Macintosh or other operating systems familiar to users. It can run all kinds of existing software, such as programs for UNIX- and Microsoft-based systems, and it has spawned a host of new programs that many prefer to the old standbys. These new programs, such as XEmacs and GNOME, often integrate word processing, e-mail, spreadsheets and many other utilities into one application. These applications are either available free on the Internet or can be purchased from distributors such as Red Hat and Cobalt at relatively low costs.
For example, a copy of the Linux operating system from Red Hat, with office applications, instructions for downloading, and technical support, can cost as little as $29.95.
Linux also allows the more adventurous to develop new software more easily because all of its source code is open. The Macintosh and Windows operating systems are “proprietary” or closed codes, making it more difficult for independent programmers and companies to develop compatible or competitive software. The entire philosophy behind Linux is that its source code must always remain open and free.
“Philosophically, Linux and universities are very in tune with each other,” said Peter Honeyman, director for the Center for Information Technology Integration at the University of Michigan at Ann Arbor. “They are both in the business of creating and openly disseminating knowledge. Practically, administrators also like it because they can get it and fix it when it breaks and there is a whole community of other administrators out there to help them learn how to do it.”
The fact that an entire room full of computers could be humming along on free software could make Linux very appealing to institutions that outfit a large number of users–namely, businesses and schools. Classrooms and laboratories from the State University of New York at Stony Brook to UCLA are using Linux as their primary operating system.
One of the biggest problems with using Linux in the university setting has been its lack of an efficient file server, which allows the computer to communicate with others over a network such as the Internet. Sun Microsystems, the producer of a popular file server for Linux, is giving researchers working under Honeyman a six-figure grant to develop a better file-server system that will be openly available.
“The current the server is constantly exchanging information with other computers over the Internet, creating a lot of unnecessary traffic,” Honeyman said. “But what administrators are concerned about is decreasing the traffic on the network, so a new file server will make Linux a better network citizen.”
For these and other reasons, Linux is not for the faint of heart. It can be difficult to install on computers with pre-existing software and it can be daunting to switch over to an entirely new system. Critics complain that there are generally bugs in free software and that buying software–not to mention technical support–defeats the purpose of freeware.
That hasn’t dissuaded Lee Burnside, system administrator for the physics department at Texas Technology University. He is an unabashed booster of Red Hat Linux.
University budgets being (as always) abysmally low, we were forced to choose between having computers or having software,” Burnside said. “We had heard about Linux from a few graduate students and decided to throw it on a test machine and try it out. After installing it roughly 30 times, for the installation process in those days (about five years ago) was truly an endeavor for the brave and/or foolhardy, we discovered that not only could we use it for the soon-to-be revamped computer lab, but that we could offload a great many other departmental tasks onto it, with tremendous savings. In the ensuing five years, I would estimate that we have saved $112,000 over other solutions, and in addition we have been provided with a stable platform whose use value grows daily.”
Stephanie Brenowitz has written about technology and education for The Philadelphia Inquirer and The Hartford Courant. She is a freelance writer based in Columbus, Ohio.
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