From the issue dated April 24, 1998
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Microsoft Marketing Brings New Business and New SkepticsThe company makes greater efforts to sell its family of products on campuses, but critics worry that its policies limit choices of students, professors, and collegesBy JEFFREY R. YOUNG
REDMOND, WASH.
In the past year, the Microsoft Corporation has become more and more aggressive in its attempts to sell products on campuses. It has promised broad new licensing deals for colleges, free Microsoft training for computing officials, even advice on structuring university information-technology budgets. Company officials have traveled the
For Microsoft, the strategic value of doing more business with the university sector is clear. For one thing, college computing has grown into a billion-dollar business -- one in which being included on Yahoo! Internet Life magazine's list of America's "most wired colleges" seems almost as important to some administrators as landing on the U.S. News & World Report's list of the "best" institutions. And colleges train many of the computer users of tomorrow, introducing them to software that they may remain loyal to for years. For colleges, however, Microsoft's aggressive stance poses serious questions. Some computing experts fear that if the company's dominance on campus continues to grow, its prices may rise and the quality of its products may fall. Others say new campus-wide licensing deals that put Microsoft software on every computer could lead universities to drop their support for competitors' products, even if users prefer them. And some academic critics see a worrisome willingness among administrators -- who are anxious to take advantage of the company's products and its largesse -- to cut deals that give Microsoft unusual clout on campuses. Microsoft sells software for almost every general need a university could have -- operating systems, server software, World-Wide Web-page tools, word processors, spreadsheets, and more. The software components can stand alone or work with competitor's products, but the best value and performance come when a university buys all of the interlocking pieces, company officials say. That's the argument Microsoft is using to persuade universities to move their most sensitive operations -- such as e-mail servers and other software for the campus- network backbone -- to Microsoft NT products. "Microsoft seems to want to offer an all-Microsoft solution to a university's back office," says Lawrence M. Levine, director of computing at Dartmouth College. "A lot of people say, 'Wait a minute, let me think about that. I don't know if I want to get married to that extent.'" Not everyone speaks about Microsoft so calmly. Although many of the campus-computing officials who are immersed in technology decisions seem comfortable with the company's marketing strategy, some faculty members and students have become vocal critics, becoming emotional in ways that seem unusual in a discussion about software. Something -- call it "the Gates factor" -- leads them to compare large Microsoft deals to Faustian bargains. They have brandished picket signs reading "More for students, not for Microsoft" when their institutions propose "partnering" with the software company. Perhaps it has something to do with the fact that the company's founder and chief executive officer, Bill Gates, is one of the richest men in the world, or that Microsoft has a reputation for squashing its competitors like bugs, as a character in "Doonesbury" put it last week. Or maybe it's the recent, high-profile investigations by the U.S. Justice Department and several states into whether the company has used unfair business practices by "bundling" its Web browser with its Windows operating system. John Robb, an associate with Gomez Advisors, a Boston-based Internet consulting firm, says such sentiment may stem from academics' loyalty to other operating systems, like Unix or Linux, or to Apple Computer's Macintosh software. He says Microsoft's attention to higher education goes some of the way toward filling the void left by the decline of Apple, which was once an aggressive force itself at universities. "To a certain extent, they're playing good corporate citizen in stepping up to the plate," he says of Microsoft. But, he adds, the company is also maneuvering to "cut off the supply" of programmers for non-Microsoft software by making its own systems the standard in academe. "I think this educational aspect is the next frontier in how Microsoft is extending its monopoly," says Nathan Newman, a program director for NetAction, a consumer group that has criticized Microsoft's business practices. Microsoft officials say that if they win market share on college campuses, it's because they offer the best products at the best prices. They also say the company can help colleges lower their computing costs if administrators are willing to standardize their systems based on the Microsoft platform. Standardization, the company argues, can simplify networks and bring down support costs. Within the past year, Microsoft's salespeople have been pushing university administrators to install Windows NT server software as the institutions' digital nervous systems. The pitch: Campus networks -- which handle such functions as delivering e-mail and Web pages, serving files, and printing -- are unnecessarily complicated if each software component comes from a different company. Many colleges now rely on such combinations, running Lotus e-mail software alongside Novell network software, for instance. "Realistically, because you are academia, we realize that you are going to be a heterogeneous environment on the client side," says Aleisa A. Spain, Microsoft's director of higher- education marketing. That is, some professors will want Macintosh computers on their desktops, some will want P.C.'s, and some will want Unix workstations. "But on the server side, that's pretty dangerous," she says, "and we recommend highly that you move toward a central server application." Some administrators are hesitant. "There is, of course, the fear of going with one vendor," says Ira Fuchs, vice-president for computing and information technology at Princeton University. "At the same time, it simplifies the approach to go with one vendor. The biggest concern is that the cost for the software from Microsoft would rise far more rapidly." "All of us are finding ourselves buying more NT servers, one way or another," says Gregory A. Jackson, associate provost for information technology at the University of Chicago. He adds that many administrators are waiting for the next full version of the server software, NT 5.0, which is scheduled for release late this year. The question, he says, is, Will it allow the kind of security and scalability that Microsoft has promised? In other words, can the company's server software handle tens of thousands of accounts without frequent crashes, and handle password- protection properly? "The technical point is the critical point," Mr. Jackson says. "You get concerned about it any time you lose options to play vendors against one another." But "by and large, Microsoft is dominant because most of us said, This is the best product at the best price." Problems would develop, he adds, only if the company started "using that dominance to force us into doing other things -- but historically, that hasn't happened terribly much." In fact, some administrators say they aren't at all concerned about a Microsoft invasion. "That's not something I stay awake at night worrying about," says Ron Bleed, vice-chancellor of information technology for the Maricopa County Community College District. "Maybe we should." Ms. Spain, Microsoft's higher-education marketing director, says the company offers incentives to help colleges make the switch to NT servers. Beginning in June, Microsoft plans to offer free, five-day training classes for college computing officials. "One of the biggest problems with moving from whatever they're at today to NT is that their staff has a knowledge base of Novell or Unix," she says. Competitors like Novell, naturally, say the best strategy for colleges is to keep a mixture of software on their network backbones. "The mixed world is actually wonderful," says Ed McGarr, vice-president of product marketing for Novell. He says his company and others design their products to work well alongside Microsoft software. Meanwhile, how Microsoft prices its already popular products for higher education has become a contentious issue in the past few months, and administrators are anxiously awaiting a new licensing deal for colleges, which is expected to be announced on May 1. Last fall, the company upset many college computing officials when it decided to remove a licensing option that many colleges say allowed them to buy enough Microsoft products to serve their communities. The option, known as "concurrent licensing," let universities pay for software based on how many people would use it at a given time, rather than on the total number of computers that would have access to it. To some, the pricing change seemed to confirm their fears about the company: Now that Microsoft produced software that students and faculty members expect colleges to provide, it was raising its prices. Some campus officials said the end of concurrency meant they'd have to pay thousands of dollars more to meet the same level of demand for Microsoft software. Others said the decision revealed that Microsoft representatives don't understand how colleges operate. Company officials say there was a misunderstanding. Their data showed that few colleges used concurrency, and they say that some colleges weren't paying their fair share. Rebecca Needham, a company spokeswoman, says colleges were supposed to pay about twice as much for each license if they planned to use software concurrently, but that many weren't doing so. In February, Microsoft paid to fly 28 administrators from colleges and secondary schools to the company's "campus" here to talk about what kind of licensing deal would make everyone happier. Some of those who participated in the day-and-a-half "advisory council" praised the company for taking the time to listen. But Microsoft says it won't budge on concurrency -- that option is history. Company officials hope to have the new licensing plan in place by July. Details await the May 1 announcement, but Ms. Spain says the plan does represent a better understanding of how colleges operate. "We're starting to think about students as just an extension of the institution," she says. "So we're now changing our licensing models to integrate more student usage." In other words, the new licensing model could make Microsoft software as common on the campuses as pens and notebooks. That seems to be just what will result from an unprecedented, four-year licensing deal with the Indiana University System that Microsoft announced last month. The university agreed to pay a whopping $6-million, but in return it's getting a broad package of Microsoft software and enough licenses to allow every student, professor, and staff member -- all 114,000 people on its eight campuses -- to have individual copies of many popular programs. The deal also includes server software. It appears to be a dream come true for Microsoft -- and a nightmare for competitors. On March 31, hundreds of students stood in lines to get their free Microsoft software on CD- ROMs. In a single day, the university gave away 6,000 disks, and an additional 3,000 vouchers after the CDs ran out. The disks include Microsoft's word-processing, spreadsheet, and presentation products, along with its World-Wide Web browser, Internet Explorer -- all of it available for both P.C.'s and Macintosh computers. A camera crew from Microsoft was on hand to record the giveaway for promotional purposes. Brian D. Voss, a senior computing administrator at Indiana, says the deal does not prevent the university from providing other companies' software as well. Indiana will, in fact, continue to offer and support competing products on campus computers, he says. Administrators at other colleges say they would be eager to strike similar deals with Microsoft, though they would like to see the full details of such a license. But some students and professors on Indiana's campuses criticized the deal in discussions on university newsgroups. There was even talk of protests. Mr. Newman, of the consumer group NetAction, says Microsoft has secured a monopoly at the state-university system, in effect. If Microsoft locks up the college market, that would reduce competition in the entire software industry, he argues. "If everybody is being trained on campuses on Microsoft, no other company has a chance -- it's 'Game over' for the rest of the companies." Peter Harter, a lawyer for Netscape Communications, says such deals could lead to a less-diverse offering of officially supported software on campuses. "The reality is they're dumbing down the university" by offering a smaller selection of software choices, he says. But Mr. Voss, of Indiana, calls such fears unfounded. The university will still support software from a range of companies, he says. "I don't like the insinuation that I.U. was duped into this or was somehow a pawn in a higher chess game. It's an academic institution, and diversity is valued. I.U. will pay more for diversity." It was the university that initiated the talks with Microsoft that led to the deal, he adds. "It's not like Microsoft has a force of hundreds of people combing the campus." As for the students getting the free software, they were "very happy campers," he says. "There weren't any protests -- or maybe I couldn't see them because there were so many people trying to get their CDs." Microsoft's involvement in a proposed partnership with the California State University System sparked a much hotter controversy, even though details of the company's role were never released. Last week, the company walked away from the deal, which aims to turn over operation of the university system's telephone and data services to a partnership that originally included Fujitsu, GTE, Hughes Electronics, Microsoft, and representatives of the university system. Hughes, too, decided to drop out of the partnership. Critics -- among them students, who staged protests -- say that under the plan, administrators would give up too much control over university technology decisions. Though Microsoft says it had little involvement with the negotiations -- GTE is the lead company in the deal -- much of the criticism of the plan by students and professors had focused on the software maker. Microsoft's departure, according to university officials, had more to do with money than with bad publicity. The four companies were to have contributed a total of $300-million for technology improvements in the university system, but Microsoft decided not to make the initial investment the deal called for, says Richard P. West, the system's senior vice- chancellor for business and finance. Mr. West says that the university is still negotiating with the remaining partners, but that a final decision has been delayed until at least this fall. Deals involving Microsoft have attracted widespread scrutiny in recent months. "Microsoft is in a position where virtually anything it does gets a close look, because it has such a strong position in the industry," says William E. Kovacic, an antitrust-law professor at George Mason University's School of Law. Asked if academe could be another staging ground for antitrust investigations into the company's business practices, he speculates that if Microsoft's competitors are upset with licensing deals like the one with Indiana, "we can expect that they will go to state officials and say, 'Take a look at this.'" But "at the end of the day," the professor believes, "this and similar kinds of arrangements will be seen as completely legitimate." "The real tension here," he says, referring to Microsoft officials, "is, Does their behavior today pose a threat that they'll have dominance into the future?" Such concerns never seemed as prominent when another technology company, Apple Computer, went after the college market just as aggressively in the early days of personal computing. Apple -- which sells both hardware and software -- once had a huge education sales force and deep education discounts. Some campuses are still Mac-oriented, but the company's much-publicized difficulties in recent years have caused many computing administrators to steer away. The software business as a whole has grown and changed drastically in the past few years. Colleges are now finding themselves struggling to pay for all of the software that users demand. Microsoft says it wants to help colleges adjust to what it calls the new economic realities of computing costs. Its representatives have held briefings at educational conferences to help colleges plan their technology budgets. Microsoft's Web site even has an interactive "worksheet" that promises to help in "estimating the costs for purchasing and keeping current a campus data network." Plug in a few numbers, and it computes -- in a Microsoft Excel spreadsheet -- what you should spend each year for hardware and software. The company says its efforts in the college market are aimed at offering the community better products and helping to build a partnership with higher education. "What we're trying to do is prove to the education community that we are a trustworthy partner over the long haul, that we're not going to do unfair or untested radical shifts," says Elizabeth W. King, general manager of Microsoft's education-customer unit. But to some, the sweetest deals from the software giant seem the most suspect. Perhaps that represents an inevitable divide between enterprises devoted to research and learning and a business devoted to the bottom line. "Is this a Faustian bargain?" asks Parker Marden, president of Manchester College, in Indiana. "We have to move the college ahead, and we don't have the money to do it, and so we have to be imaginative. And if the imagination comes from Microsoft, what would we say?" His college hasn't been approached by Microsoft about big licensing deals, he says, but he would be happy to consider them. "In the end," he says, "I hope we would be principled enough to be careful."
Microsoft Programs for Higher Education Microsoft officials say the company has a number of programs that benefit higher education, including the following.
ACADEMIC PRICING. The company discounts some of its products for faculty members, administrators, and students. (http://www.Microsoft.com/education/)
CURRICULUM PROJECT. An on-line catalogue of curricular materials for over 800 courses at more than 300 colleges and universities includes material from textbook publishers and links to other Microsoft sites, such as that of MSNBC. (http://academicoop.isu.edu/ colleges/curriculum.html)
COLLEGE OF EDUCATION TRAINING PARTNERSHIPS. The company says it works with close to 100 education colleges to make sure that teachers know how to use technology.
PARTNERS FOR THE ADVANCEMENT OF TECHNOLOGY IN HIGHER EDUCATION. Microsoft has established a partnership involving the AACSB: the International Association for Management Education, the American Association for Higher Education, the American Council on Education, the Council of Independent Colleges, the National Association of College and University Business Officers, NAFSA: Association of International Educators, and the United Negro College Fund. The company is helping the associations to use new technology and to serve as models for their members in the use of the technology. http://chronicle.com Section: Information Technology Page: A26
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Copyright © 1998 by The Chronicle of Higher Education