Small bloke ready to take on giant

By CHRIS BARTON

This is a story that could - depending on how the Commerce Commission reacts - make startling headlines.

"NZ Government sues Microsoft" would grab attention, but given our Commission's record of timidity when it comes to monopoly matters, "Commission clears Microsoft" is a more likely outcome.

It's a classic tale of a Kiwi battling against the odds, of one who has said enough is enough, of one who is prepared to stand up against Microsoft's bullying tactics.

Meet Craig Horrocks - an unlikely crusader who describes himself as "a very low-profile guy" and who normally adopts a Zen-like philosophy of "treading lightly in the world".

So what's got this mild mannered lawyer so riled?

So much so that just before Easter he filed a complaint with the Commerce Commission alleging Microsoft's Software Assurance regime was anti-competitive behaviour.

It was filed on behalf of Infraserv, an information technology company owned by Clendon Feeney, the law firm where Horrocks is managing partner.

Horrocks is hot under the collar because Microsoft's new software licensing is paid in advance and his firm has to spend "400 per cent of our average annual expenditure on Microsoft products by July 31" when the new scheme comes into effect. Daylight robbery.

But that's not all. Besides costing users about 58 per cent more, the regime also removes choice - the right to upgrade when you see fit.

Under Software Assurance business users are effectively forced to upgrade because they have to buy a two-year software subscription.

The change is significant because in the past, companies that bought Microsoft licences could skip some upgrades to save money. Those older licensing programs, however, have been phased out.

Businesses which do not buy in to the scheme to "get current and stay current" have to pay the full price of the software when they next decide to move to a new version.

What's wrong with that? As Horrocks points out in his complaint, it removes the "presumptive right of loyalty program discounts on upgrades". That's how it has always been with software. You buy your product and when you upgrade you pay a discount price.

When Office XP Professional was released last year, for example, the full price was $1659 and the upgrade was $969 including GST.

But surely Microsoft is free to price its products as it sees fit? Maybe not - especially when you are a monopoly.

The anti-competitive provisions in our Commerce Act are there to make sure those that hold monopoly power in a market don't abuse it.

On the face of it, that's what Microsoft appears to be doing - forcing customers to upgrade when they don't want to and making them pay more in the process.

Why? Because most business users are so locked in to Microsoft software they don't have any choice.

Adding insult to injury, the new licence says paying your two-year subscription does not necessarily mean Microsoft will provide an upgrade during that period. "Software Assurance" meaning you're assured of nothing.

It's all got many wondering - Horrocks included - why on earth Microsoft would treat its business customers like this. (Consumers aren't facing this issue yet.)

In an open letter to Microsoft on Clendon's website, Horrocks builds a case to explain Microsoft's motives. Like most lawyers he goes on a bit.

I've taken the liberty of paraphrasing - possibly reading between the lines - his argument:

* Software Assurance applies only to small and medium-sized businesses. Large customers, because they buy more, can negotiate special dispensations to the subscription deal.

* Software Assurance is about moving everyone to the concept of "software as a service" to be subscribed to, rather than a product to be bought.

* Microsoft is moving to this business model to further lock businesses in, because it is worried about Linux and much lower cost "open source" software.

I'd add that Microsoft may also be worried about dwindling revenues because businesses are now taking much longer to upgrade than before - mainly because business software is mostly stable and new versions often don't present a compelling reason to upgrade.

Microsoft is also clearly worried about Governments around the world - sadly not in NZ - adopting the "software libre!" rallying cry.

That's Government legislation compelling Government agencies and sometimes Government-owned companies to use open-source or free software unless proprietary software is the only feasible option. (See Exapmles 1 and 2 below).

It's clear too that Microsoft is indeed moving everyone towards the "software as a service" paradigm. Windows XP is riddled with automatic internet connecting devices such as Product Activation, Passport and Update which could easily turn it into a pay-as-you-go service.

The paradigm shift has been enough to force Clendon Feeney to evaluate moving to Linux.

As one chief information officer put it to me: "Software Assurance isn't anti-competitive because it's driving people towards competitors."

But it's a shame New Zealand's technology managers aren't standing up to be counted alongside Horrocks. Many have expressed - mostly off the record - frustration, even anger at Software Assurance. With July 31 looming large, it's time to upgrade bleating into courage of convictions.

Clendon Feeney Barristers & Solicitors

Example 1

Example 2

* Email Chris Barton