Details of Linux-in-Munich Deal Revealed

An anonymous reader writes "USA Today is running a piece about the lengths which Microsoft went to in order not to lose the government of Munich's account to a Linux-based proposal from SuSE. Interesting to see how these types of contracts are structured, and just what Microsoft is willing to give up to prevent losing to Linux."

German legislation requires this

[jetmarc]

Government uses tax payers' money to purchase the computer equipment.

The German legislation requires, that government has to make a public
call for offers, and then choose the cheapest offer. This was done
for buildings etc, and recently it occurred to the Germans that this
law also applies to computers and software. After all, it's quite a
huge investment. Unless Microsoft lowers the price, or Linux increases
the price, or Microsoft bends the numbers so that their offer appears
cheaper than Linux, government HAS TO choose Linux.

I think, the German government is not keen on using Linux over Windows,
and they will appreciate when someone comes along with a good-looking
statistics that allows them to go Windows without risk of being held
liable later.

The Microsoft numbers about total-cost-of-ownership obviously are still
not good enough, otherwise the case would be closed already since long
time.

Marc

Here's the clincher

[mblase]

Though Microsoft underbid IBM and SuSE by $11.9 million in Munich, city officials were concerned about the unpredictable long-run cost of Microsoft upgrades

Munich chose to spend a little more money now to save a LOT of money down the road. This was a big decision, and may have political ramifications in the short-term, but no doubt it was a wise one. Microsoft's strategy is to push an upgrade after X number of years by cancelling support for older products. With Linux, the city can upgrade what they need to, when they need to.

Re:quality and value

[Laur]

No, their offer before the last minute offer was still lower than Linux, just not by as big a margin. Besides, Microsoft's last ditch efforts just kinda pissed people off.

MS: "This is our best offer."
Munich: "Thanks, but we're going with Linux."
MS: "OK, take off another 8 million."
Munich: Wha... But you just said ... Grr...

Re:FUD

[IamTheRealMike]

Yay free software. They ended up spending millions of dollars more over the Microsoft package.

Yes, however they got a lot more for their money (in terms of software, support and local employment) and this was only after Microsoft gave large discounts.

I'm sure training and attrition will offset whatever benefits they could have realized by avoiding the "forced upgrades", which SuSe will most certainly start doing eventually when they come to their senses, just like RH did.

The effort to switch from SuSE Linux to Red Hat Linux, or to Mandrake, or to MunichCity Linux, is very very low. Not nil, but low. So, if SuSE or IBM did try and screw them, they could go elsewhere.

Despite that, I don't understand how upgrades are forced. You can still download very old, unsupported versions of Red Hat Linux. If you're referring to the "only 12 months of free errata" thing, then who cares? RHL is meant for developers and home users now, not servers or corporate desktops. I know people still running on RH 7.1, they aren't dead yet.

I think it's rather disingenuous to jump from that to "forced upgrades". If I could still buy Windows 98 then maybe you could also argue that Microsoft don't try and force upgrades, but you can't....

The vote was 50-30. Doesn't seem to me like an "overhelming" victory. Well, I guess it depends who you're rooting for.

I think it was meant in the sense of "overcame overwhelming odds" - ie Microsoft, Ballmer himself, offers very large discounts, you've got all the inertia and proprietary lockin there, and still Linux won out. Not in terms of vote numbers.

Re:Mozilla?

[Vexalith]

Try Mozilla Firebird then. The Gecko engine is much more w3c-conformant than Internet Explorer. Also Firebird doesn't come with Outlook Express. Eugh. I could read in to your post and interpret you wanting pages to render correctly as meaning "exactly as in MSIE". This is just wrong...

Linux used in political campaign

[Domino]

As much as I welcome that the city of Munich has decided to use Linux, I am really pissed that the ruling party in Munich, the SPD, is now running a poster campaign all over Munich with the slogan:

Mehr Linux, Mehr Freiheit, SPD
(More Linux, More Freedom, SPD)

Linux should not be misused by political parties to strengthen their chances for reelection.

Here's [lumma.de] a screenshot of the poster.

Re:quality and value

[deadsaijinx*]

the two most common factors that I've seen for switching to linux have very little to do with the prowess of linux. They are price and pure disgust of MS. I think anti-MS sentiment is one of Linuxes selling points. Often, when I help people convert their small business file-server to Linux, they make that choice namely because of frustrations with MS and Windows, not because of any particular prowess in Linux itself. They do, however, quickly see that Linux owns on the server end.

Re:Linux competitiveness.

[FFFish]

To put the final nail in the coffin, SuSE/IBM ought to bring the project in under the accepted bid price. That would wake up a LOT of PHBs.

Re:Oh come on...

[SmallFurryCreature]

The news is that Microsoft has forced through an extremly controversial licensing policy on its customers. It defended this in saying that it really was in the customers best interest. That in the end it was cheaper for the customers. Most customers caved in and signed up for it and Microsoft had won. You now lease software and pay for upgrades you may never ever use while locking youreselve ever more thightly in their grip.

Then one little city rebelled and MS instantly rewrote the licensing deal. How many other MS customers who swallowed the original deal will now feel extremely pissed off? Pissed off enough to demand the same kind of cuts when their contract is up for renewal?

That is the real story. That MS has caved in on its own demands when faced with a little bit of pressure.

Price Tag

[ptarjan]

Why is the price tag so high for Linux. It is FREE open-source software running on already existing hardware.

Isn't this just Upgrading the operating system? How can Linux cost more than Windows when the software is free??

$39 .5 million for Linux package. Linux is free

[truthhurts1]

"Unilog first recommended that the city select a $39.5 million Linux package from IBM-SuSE over a $36.6 million standard upgrade package from Microsoft" . What does IBM get out of this ? Thought linux was supposed to be free ? Why are these clowns even paying for it ,just download it and install on every computer.

Re:Oh come on...

[Anonymous Coward]

It shows how much of a threat they consider Linux to be. If they didn't fight it, it would show they don't think it will go anywhere.

Re:quality and value

[dJCL]

That exactly my situation. I run my linux system, all the latest versions(or close) of the software, on an AMD K6-2 500Mhz with Dual Head. Plays DVDs, DivXs, runs great, fully responsive, with all the little features turned on. I have not gotten a new computer in years because I don't need to. My laptop is a 233 and does near the same(no dvd playback, don't have any divx installed, but it does do VCDs)... The only reason I intend to get a new computer some time soon is basically, to add to my collection.

On the other hand, Windows2000 runs well on the same hardware, I use it on my laptop to interface with some unsupported and propriatary peripherals(say those two words a few times fast, hell, type them fast!)... and it works well, but Linux is my prefered OS.

Anyway,
Enjoy

Marketing 101.

[Anonymous Coward]

If you have to compete on price... you've already lost.

(As Microsoft drops it's bid by several million).

Sure, the concept is a little different when it comes to open source software - and as with the city of Munich, price wasn't the main reason they made the decision.

(If time == money, I sure as hell didn't choose to learn OS software because it would be quick to pick up the technicalities. I would have saved myself a lot of time by upgrading to XP. I chose to move to FreeBSD because the open source experience is overall a more enjoyable, less big-brother-ish experience.)

Any chance this is nationalism?

[geekee]

So Munich pays a German sw company more for software support instead of paying an American company less. Sounds like nationalism had some role in this. Certainly the US govt. support of MS has something to do with them being a US company.

Re:from the guys who hit bill in the face with a p

[siskbc]

goes to show how much they hate microsoft in germany

I have nothing whatsoever to back this up, but I wonder if things had been different had it been Red Hat vs. MS and not Suse? I know parent was trolling, but it does bring up something of a point.

Re:Here's what clinched it

[jafac]

This has become obvious on the Govt project on which I'm working.

Our project was a 5-year one.

It was spec-ed out with the technology that was current at the time - and we're building a system that's 5 years out of date. It meets the original requirements, but now we're being hounded to upgrade everything (and re-code to account for all the changes that entails). With no additional funding.

And when we deliver the project, in another two years, it will be obsolete again. And unmaintainable. And unlikely to survive any upgrades without a total redesign.

And no license compliance overhead

[jackbox]

I didn't see this mentioned in the article or in the comments here, but I'd bet one of Munich's "strategic" considerations was the overhead in managing license compliance. Particularly with MS's concession to unbundle MS Word for some machines. Watch those savings go down the tubes when the MS lawyers come by and say, "So, can you prove you have installed only MS Word on X thousand machines?"

Assuring license compliance on desktops is a frickin' nightmare, and the lack of that overhead is a major advantage of open source software.

(And that's not even considering the ridiculousness of the Microsoft position that basically says, "We want your business so much we're going to let you NOT buy some of our software that you don't need! Yes, normally, we make everyone buy this whether they need it or not, but because we pride ourselves on being customer-driven, we will actually break our own rules and not sell you something you don't want!") Sheez. GMAB. (Give Me A Break)

Next customer's starting point

[Sloppy]

Microsoft's last offer, with the prices low and the debundling and the longer-term support .. should make a good starting point for them, in negotiations with every single potential customer from now on.

If you're thinking of buying a Microsoft product, then ask them: "Surely I shouldn't get a worse deal than what you were willing to offer Munich?" It's just a question of how much better they can make that deal, for it to start to look competitive.

A good example of Microsoft's arrogance

[Loundry]

I think their "last minute" offer shows that Microsoft still thinks that everyone else either stands in awe or cowers in fear when in Microsoft's presence. I think that the deal-makers at Microsoft were thinking, "They'll be stunned to receive a deal from someone the likes of Microsoft!" only to be completely chagrined when Munich was not impressed. Microsoft isn't used to having to bargain. They're used to having their way.

Re:Linux competitiveness.

[aero6dof]

What the hell is this myth that some magic switch gets thrown that makes all of your computers stop working, forcing you to put a new version on? Don't want the new version? Keep using the old one!

Uh huh. So Dieter just hired on and needs a new computer so lets just purchase a new desktop for him... oops, I can't buy an new license. Do I a) give him the latest OS and eat the cost of supporting multiple different setups, b) Eat the cost of upgrading everyone, c) risk criminal prosecution and copy the OS? d) OSS.

Re:Linux competitiveness.

[Keeper]

So Dieter just hired on and he gets a new desktop computer. So you go to install the 6 year old version of linux which doesn't have support for the latest wizbang hard drive interface that the computer came with (or the new fangled bus architecture, or the non x86 cpu instruction set...whatever). So now do you...

a) give him the latest OS and eat the cost of supporting multiple different setups, or b) eat the cost of upgrading everyone.

Gallman

[Johnny Mnemonic]

From the article:

With battle lines drawn, Microsoft turned to a freshly hired recruit, Jurgen Gallman, steeped in Linux. Until last November, Gallman had been IBM's top Linux executive in Germany.

Nobody else (at +5) has commented on it, but this guy must sure feel like a tool...

Re:Linux competitiveness.

[Keeper]

You are making the assumption that time is free. "Time" is the biggest expense a company sees.

The "upgrade" cost you speak of is less than 0.25% of the cost of employing a person for a year.

Just stating that Windows costs money and Linux is free is not an accurate view of the picture. If you lose 4 hours of productivity over the course of a YEAR (that's 40 seconds per day) using linux instead of using windows, windows would have been cheaper. Obviously this depends on how much you pay your employees, but I don't think I'm too far off of the mark.

The unspoken story here...

[heironymouscoward]

Linux, linux, linux... really?
Follow the money. This is about one company beating another in an important deal. The winner here is IBM, who have promised Munich a better deal than Microsoft was able to deliver.
Linux is IBM's (not so) secret weapon, the product they can push as a Windows killer.
Don't forget that for many large institutions and their IT departments, Microsoft is somewhat of an annoying upstart that caused havoc by giving tools like Excel and Access to people who then broke the back of centralized IT. IBM represents the comforting security of Big Iron, and with Linux, Big Iron that is Definitely Hip.
This is a victory for Linux, but before we all do a dance of joy for freedom and the GPL, remember that this is about money and power and IBM, the company that taught Microsoft everything they needed about monopolies, customer extortion, and unfair competition.
There is no reason to believe that this is not also the future of an IBM that once again gains a dominant position in corporate IT.
If there is one crucial device that will keep Linux alive it is the GPL, which is a beautifully designed poison pill against corporate takeovers of free software. Richard Stallman, thanks again!