Microsoft's $844 Million Software Giveaway To Nonprofits: Pure Charity Or Cheap Marketing?
from the free-now-pay-later dept
Microsoft has just released its 2011 Annual Financial Report. But alongside that document's dry facts about its $69.9 billion turnover, and the operating income of $27.2 billion, Dj Walker-Morgan pointed us to a more interesting publication, Microsoft's 2011 Citizenship Report:
We release our Citizenship Report at the same time as our Annual Financial Report to give our broad base of stakeholders a full view of Microsoft’s financial and non-financial performance. Corporate responsibility means more than returning value to shareholders – it means engaging with stakeholders to address our responsibilities in the areas of environmental, social and governance issues. We believe all corporations have, as part of their license to operate, a responsibility to contribute positively to society on a global scale. To quote our company’s founder, Bill Gates: "It takes more than great products to make a great company."
So let's just take a look at the things Microsoft has been doing to "contribute positively to society on a global scale". Here's one detail:
We have increased corporate charitable giving year-over-year since fiscal year 2008, despite economic challenges. Our employees volunteered more time—more than 380,000 hours in the U.S. alone. We also contributed more cash and in-kind support to nonprofits—$949 million globally.
That's nearly $1 billion of cash and in-kind support to nonprofits – a big number. There's a web page devoted to these activities, with this paragraph giving some more information:
In FY2011 we donated more than $844 million in software to 46,886 nonprofits in 113 countries/regions.The value of software we have donated globally since 1998 is more than $3.9 billion. The FY2011 value of software donated now includes employee software donations; previous years’ in-kind giving numbers do not.
This means that of the $949 million dollars "contributed" to nonprofits, $844 million -- 88% – was actually software, presumably Microsoft's, since it's unlikely it went out and bought it from competitors.
What's harder to judge is how much that $844 million worth of software actually cost Microsoft: the specific phrase used is "fair market value". This has quite a well-defined meaning in US tax law:
The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.
Now, I'm not suggesting that the people who put up the web page about Microsoft's contributions to nonprofits were following that definition exactly. But equally, it seems likely that the gist is the same: it's a kind of rough price that you'd usually find in normal markets selling the products in question. And those prices are almost certainly well above the cost of manufacturing, especially if the software was delivered online, or if multiple installations were permitted.
So the actual cost to Microsoft of that donated software is likely to be only a small fraction of the $844 million "fair market value" cited. This inevitably tempers our admiration for Microsoft's ten-figure generosity somewhat.
But there's something else. Microsoft wasn't just handing out a bunch of any old products: it was giving away mostly Windows and Office, judging by a table showing a breakdown by region. Both of these are well-known for the lock-in effects they produce: once you start installing applications and creating documents with them, it's quite hard to move to a completely different platform like Apple or GNU/Linux. Most people don't even try.
So these free copies not only cost Microsoft considerably less than the $844 million figure it used to calculate that near-billion dollar total for its corporate brochure, but it wasn't really altruistic at all. With hundreds of thousands of copies of Windows being distributed (417,030 were supplied for refurbished computers alone), there is a very high probability that Microsoft will be benefiting financially – and not just in terms of goodwill -- from upgrades and follow-on sales for many years to come.
Making copies available at zero or very low prices is something that Microsoft has done time and again whenever there was any danger of customers "defecting" to open source. For example, in 2009, Russia planned to deploy free software throughout its education system. That didn't happen, in part because Microsoft offered to license Windows for $30 a copy (article in Russian.) It's part of the rough and tumble of the highly-competitive software business.
Still, it's a little rich for a company as profitable as Microsoft to try to dress this up as “corporate charitable giving.” It's really nothing of the kind: it's marketing, pure and simple, and Microsoft should be big enough to describe it as such.
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Filed Under: charity, marketing, software
Companies: microsoft
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Lock in
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Re: Lock in
Given that all of Microsoft's products have viable open source alternatives, giving free copies to the non-profits serves the interests only of Microsoft.
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Re: Re: Lock in
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Re: Re: Re: Re: Lock in
Not only does it setup easier, it goes down less and requires FAR less support hours than an equivalent Linux/Unix build (running multiple services). Its also WAY cheaper than any proper UNIX setup, but performs WAY faster than any Linux build (in ways that matter to sysadmins, backup/restore performance, DB IOPS). Also, VSS is by FAR the best granular Disaster recovery tool on the planet, it destroys all *nix versioning support.
Yes, Linux is better for a simple web server, and Unix is better for a 4-D comprehensive database, but for everything in the middle Windows blows it away.
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Re: Re: Re: Re: Re: Lock in
They live in the corner, scared of all competition.
And, it doesn't play well with pretty much anything.
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Re: Re: Re: Re: Re: Lock in
"VSS is by FAR the best granular Disaster recovery tool on the planet, it destroys all *nix versioning support."
Thanks for quite possibly the best laugh I have had in quite some time!
As a seasoned .Net developer I can say that VSS sucks. TFS (as version control) is average at best and bloody slow. Subversion is a way better product than VSS could ever be and Git is a little better than VSS (even though it doesn't have all of VSS feature-set).
Haven't you just swallowed the MS FUD pill!
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Re: Re: Re: Re: Re: Re: Lock in
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Re: Re: Re: Re: Re: Lock in
Think you are putting the chicken before the egg there. More accurate would be "EVERY 3rd party enterprise tool out there integrates properly with it"
Subtle but important difference, yours is saying MS is the best at 3rd party integration because of MS, later says 3rd party developers make sure their products work well with the most used software...and it's the latter that is correct
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Re: Re: Re: Re: Re: Lock in
You just have to accept that Microsoft is doing its darnest to undermine open standards. That's just the reality of things. NO amount of Microsoft shilling is going to change anyone's mind about open standards being better than proprietary lock-in.
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Re: Re: Re: Re: Re: Re: Lock in
Darn.
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Re: Re: Re: Lock in
Microsoft used to have massive documentation as well, but that's pretty much down the can. Useful tech docs are few and far between, and most people have to rely on Microsoft Partners, who have a direct line to Redmond.
There's less and less you can do with Microsoft products. And if they don't get the message, you can bet that they will be losing considerable market share in the coming years.
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Re: Re: Re: Re: Lock in
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Re: Re: Re: Re: Re: Lock in
My brain just exploded.
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Re: Re: Re: Re: Re: Lock in
In my limited and brief experience, Software Developers dont manage complex systems.
Many novices such as yourself often say things like this because they lack both the depth and breadth of experience to realize that not every development environment has the same goals, the same methodologies, the same personnel, the same tools, the same ANYTHING. There are some software developers who don't manage complex systems -- in fact, they don't manage any systems at all. But at the other end of the spectrum there are software developers who manage fiendishly complex systems...and some of them do it very well.
Along the continuum in the middle lie all the possible variations. And one of the ways to recognize good developers (although not the only one) is to note those who are capable of systems management -- because it portends well for their chances of crafting software that is actually manageable by others. Moreover, good developers will craft their own development environments -- top to bottom -- and manage those as well.
And the best developers can do it all: they're as agile with network design as kernel tuning as shell scripting as database interfacing as algorithm implementation. They're not common (of course!) but they're also far better at systems management tasks than nearly all of the people who actually have that in their title.
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Re: Re: Re: Lock in
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Re: Re: Re: Lock in
What you mean is that a homongenose MS infrasturcutere is easier to manage than an unhomongesose inf. However studies have shown that a relatively homgenose *nix inf. takes an order of magitude fewer adims.
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Re: Re: Re: Re: Lock in
Of course, the inferior people who advocate Microsoft products don't and won't grasp this. They will prattle on and on and on about how great it is, never realizing that they've been conned -- or, if they do, refusing to admit it.
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Re: Re: Re: Re: Re: Lock in
I have a general skepticism of anything that needs that much marketing, so I think I'll choose to believe you instead of researching, until it matters to me.
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Re: Re: Re: Re: Re: Re: Lock in
And you've hit upon the key in one sentence: borrowing from your comment, it's ALL marketing. There's nothing there. It's a grandiose pile of software which purports to do everything...and nothing. It's as if -- and this may not be too far off from the truth -- it was explicitly designed so that its feature set aligned with as many RFPs as possible.
And in a business sense: that's quite clever. There are PLENTY of CIOs who are utterly clueless morons, and will believe this kind of marketing BS. So by speaking directly to them in a language they understand, Microsoft has found a readymade customer base. And well, nobody ever got fired for buying IBMxxxMicrosoft -- they just got more money in the next year's budget to keep desperately attempting to make it work.
But certainly anyone who advocates it is signalling, very loudly and very clearly, that they are technically incompetent -- not to mention appallingly naive.
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Re: Re: Re: Re: Re: Re: Re: Lock in
Irrelevant comment: people like you are the ones who make me think the REAL upcoming dilemma in the computer world is that there are only 17k 3-letter acronyms :p
Just something I've noticed over your posts.
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Re: Re: Lock in
Microsoft Word. Name ONE. ONE. Piece of open source word processing software that isn't a steaming pile of crap. Just one. You may not like word, but there is NO other word processing software out there that doesn't suck in horrible, horrible ways. That will either crash and send your documents into the aether, or lack every feature you're looking for. If you don't use Word, then your choice is either stability or feature-robustness, but not both. If you want both, you go back to Word. Period. End of story.
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Re: Lock in
That's like saying that being vendor locked to HP is as bad as being vendor locked to "laser printers" because you can't put ink cartridges in them.
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Re: Lock in
Apple did do this in the first Jobsian era, giving computers and software for free or nearly free to schools all over the country. They played up the altruism aspect of this (and there is one), but they were also up front about the marketing aspect. They said numerous times that part of the reason they were doing this was to get students accustomed to using Apple computers so that as they moved forward in life, they would buy them. Further, they stated, this would create pressure for businesses to use Apples instead of others because they'd have a large part of the workforce that would want to use the same computer at work as they had at home.
In the end, this strategy sort of worked and sort of didn't. It did get Apple up to around 10% market share, and it did help to cause a deep entrenchment in certain demographics, but in the big picture did not result in significant victory.
The "lock-in" effect is real, but the power of it is often greatly exaggerated.
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Re: Lock in
That being said -- I've been involved in trying to figure out the cheapest way to get valid Microsoft Windows licences and it truely sucks. Free software may not cost Microsoft much, but it is a big savings to the NPO.
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Re: Lock in
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Re:
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Re: Because that's the software they want to use but can't afford.
And remember, with vendor lock-in, they have very limited choice in this: they get new hardware, and find the old software won’t work on it any more, so they don’t even have the choice of continuing to use the old version.
So donations of proprietary software always come with strings attached—very long and sticky strings.
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Re: Re: Because that's the software they want to use but can't afford.
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Businesses also do look at donations and charitable work as marketing, it's why they so proudly put their logos on the buildings, wave flags at events, and have their logos on the press releases and such. They could do the charitable work without mentioning it and without taking advantage, but in the end, they do it because it gets them a better profile in the community. Microsoft isn't alone in doing this sort of thing. Heck, ever celebrity who appears at a fund raising event or lends their name to a charity is doing it not only to help them out, but also to help themselves out. Otherwise, they would do it privately and quietly.
Why hate on Microsoft so much?
I think you are reaching way, way, way too far on this one for nothing. Your outrage is misplaced, and seems like a hit piece from the "free software" people (such as yourself). Bitter much?
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Re: @Anonymous Coward: "Microsoft isn't alone in doing this sort of thing."
That every corporation does it only points up the uniformly evil nature of corporatism, doesn't excuse anything.
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Re: Re: @Anonymous Coward: "Microsoft isn't alone in doing this sort of thing."
The companies themselves do it for less than altruistic reasons, but in the end we get the same results - their taxes drop, the non-profits get a benefit, and away you go.
I think Glyn is just upset because they aren't using freebieware OSes and other software people aren't familiar with, instead of the common MS stuff.
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Re: Re: Re: @Anonymous Coward: "Microsoft isn't alone in doing this sort of thing."
The reason we don't like it, likely including Glyn but he might not share my particular opinion, is because that $1 billion doesn't mean what they make it seem like it means.
Of that $1 billion, almost none of it comes out of their pockets. They could have installed all free OS's and software instead . . . or, they could have downloaded pirated versions instead.
End effect is that the organizations which received this 'charity' are just as well off as they would be if Microsoft hadn't stepped in.
It didn't cost them $844 million to gain that $844 million worth of tax refund, that's more where we're pissed off.
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Re: Re: Re: Re: @Anonymous Coward: "Microsoft isn't alone in doing this sort of thing."
That's inaccurate. Let me fix this:
End effect is that the organizations which received this 'charity' could potentially have been as well off as they would be if Microsoft hadn't stepped in. They may also have still bought microsoft products. (I don't think using MS products is a wise choice either way, but some people, like Blaktron here, disagree.)
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Re:
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Spin
You can judge for yourself the positive effects on the communities they donated to.
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Re: Spin
Now, okay, there is a certain type of lock in with addiction, but still you are taking a risk.
If I wanted a safe bet, I'd got the msoft route and give away for free, something that has an actual cost of absolutely nothing.
All of the potential lock in, none of the actual expenditure, win, win.
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And don't forget that inflated value is TAX-DEDUCTIBLE.
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Re: And don't forget that inflated value is TAX-DEDUCTIBLE.
As for Microsoft, they should be afraid yes. And they should be very careful with PC gaming. If things go out of Windows and to Linux they are basically screwed.
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So Microsoft does not own that software anymore? No, this is a lie.
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Re: Duh
That's because a donated support contract costs WAY more than a donated $0.50 dvd with an alleged 'Operating System' on it.
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Re: Re: Duh
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Re: Re: Re: Duh
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Re: Re: Re: Re: Duh
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Re: Re: Re: Re: Re: Duh
Given the cost of their licenses, damn right they should include 2 free support calls.
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Re: Re: Re: Re: Re: Duh
Of course, I've also never needed to ask for support, because of the extensive documentation which often already does address my exact problem down to model #'s.
My point is, in general, (there are exceptions), Linux distros aren't made or run by commercial entities and they still outperform MS.
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Re: Re: Re: Re: Re: Re: Duh
Go to linuxquestions.org and take a look around or ask questions. You'll find plenty of helpful people there.
The worst attitude you'll get is the occasional RTFM, and if you haven't done due diligence with Google, you deserve it.
Much better than "Peggy" at the MS help desk in India, reading the same screens (verbatim) you just clicked through using MS's "help" buttons, IMHO.
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TechSoup
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Re: TechSoup
Microsoft is obviously one of the larger publishers in the TechSoup system, and they have restrictions in place to make it harder for individuals to game the system. For example, you can only purchase 1 a year and, if I remember correctly, you can only purchase 5 SKUs at a time. Need one package 3 months later? You'll need to wait another 9 months.
The TechSoup system is a bit inconvenient, but the benefits to the non-profits make it worth the hassle. Several years ago the non-profit I volunteer with needed to purchase 15 copies of Office Professional Plus 2007. It cost us a total of $300, or $20 per computer. That's real savings, meaning lower IT costs and less money diverted away from service delivery. Those were the savings for a single office, but we have over 800 offices in the U.S. The savings start to add up to real money after a while.
The point of this article, however, is whether Microsoft is right to state that they donated $844M worth of software when it cost them far less to do so. Frankly, it doesn't matter. The IRS says that the difference between what they could have sold the software for and what they sold it for is the value of the donation, not the difference between their cost and the sale value. It might only cost (hypothetically) Microsoft $50 to produce a $400 software program, but if they sell (or donate) that program to 501(3)c for $0 the IRS allows them to count that as a $400 donation, not a $50 donation. If they sold it for $50 it would be a $350 donation.
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What Software Giveaway?
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Mercy and Charity from the King's View
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Re: Mercy and Charity from the King's View
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The first sample is always free...
But I will say, it's highly amusing to watch the weak, the stupid, the ignorant and the gullible fall for the scam over and over and over again.
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Pure Charity Or Cheap Marketing? Both!
MS clearly sees and leverages this as marketing opportunity (a great deal of corporate charity sponsoring is marketing) but that being said, it's helped people. MS should be applauded although maybe not as loudly as they are applauding themselves.
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Re: Pure Charity Or Cheap Marketing? Both!
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I Am The World's Most Charitable Person!
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To take another example, the sanofi-aventis Patient Assistance Foundation has apparently given $321m as of 2009. (I'd link to it, but the last comment I posted with a link was blocked.) Their aim is "to assist U.S. patients with limited financial resources in accessing needed sanofi-aventis medications". I bet those medicines didn't cost $321m to make, but I imagine the people who received those medicines were no less grateful because of that.
There's value in breaking down these figures to see how large such a donation really is, and there's also value in exploring the benefits Microsoft accrues from such acts, but please don't be too cynical about it.
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Re:
These three Mafia thugs, were beating this guy so bad he feared he would die, but then Frank said "That's enough boys!" and they stopped.
He was very grateful and Sinatra comes out a hero in that story.
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This isn't a donation.
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This isn't a donation.
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Re:
FTFY
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Sorry, but Microsoft is doing a good thing here. Giving away good, user-friendly software which has the best compatibility of any of the OSes, and the best office software, is not a bad thing, and let's face it, how many companies are actually going to buy all that much MORE than office anyway? If they get whatever database software they need, they're pretty much done.
You're acting as though Microsoft has this huge amount of stuff they COULD be giving away, but aren't, but they are in fact giving away -their best products-. Whining about this is just a show of you being terrible.
Do companies use charity as a form of marketing? Obviously. But this is true of all companies ever, and doesn't mean its not good for the charities - it just means that the companies get something out of it too. And the fact that Microsoft gives away so much is in fact noteworthy. A billion dollars NOT spent on OS/office is a hell of a lot of money as, let's face it, what else were they going to buy?
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