How can a cheap license sometimes save more money than a free license? Chad Perrin explains why this is often true in educational environments.
Those of us who have been using open source Unix-like systems for a while do not need much convincing about the quality of such software. In general, we know that OSs like Debian GNU/Linux and FreeBSD, at least compared to MS Windows, tend to be:
One more big point, particularly when talking about businesses that are concerned with saving money and home users on tight budgets, is the fact that such open source operating systems can be had without paying a lot of licensing fees — or any, in fact. Completely aside from the fact that most users of open source software consider what they use to be superior to closed source counterparts, it seems reasonable to expect people to choose to save money. Even if the software was only almost as good, being free should convince people to use that instead of the expensive alternative.
Dave Gutteridge put it succinctly and clearly:
Keep in mind that when you're saying that Windows is worth 200 dollars more than Linux, you're saying the differences are worth that much, not the whole thing.
Still, people continue to use MS Windows. It is not just people who need to share Excel spreadsheets at work, who play Starcraft II, or who need AutoCad software for work purposes who use it. People who do nothing but read email and surf the Web — possibly even using Firefox, which works just as well (yes, with Flash) on this FreeBSD system as it does on MS Windows — still stick with Microsoft's flagship OS, despite the cost. Why would they do so? What makes it worth $200 to use MS Windows instead of something free that does the same things?
Dave Gutteridge had something to say about that, too. His answer is simple: Windows Is Free. He does not mean that you can go to the store and get a complimentary copy to install on your computer. He does not mean you can go to microsoft.com and download an installer ISO to burn to CD. While people often do not see the price they pay for it when they get a new computer with Windows already installed, and that price is much lower than the MSRP $200 for a shrinkwrapped box from Best Buy, he is not talking about that either. As he put it:
The elephant in the room that no one is talking about is cracked software.
He makes a deeply compelling case for the fact that, for most intents and purposes, MS Windows really is free in the eyes of the home user. In No Really — Windows Is Free, Dave even goes on to reinforce his argument more thoroughly and address the matter of pre-installed systems in more depth. The economic reality is that where artificial scarcity is imposed on a market built around a non-scarce "product," black markets answer demand. As a result, the practical price of MS Windows for many users is "free". Because Dave Gutteridge did such a thorough job of making the point, we need not spend any more time on it here.
One of Apple's early plans for expanding market penetration was to get its computers into schools in the United States. As a result of this, many who attended public school in the '80s clearly remember the Apple IIe, and probably recall nominally educational games like Lemonade Stand with some nostalgia. The idea was that capturing the hearts and minds of future computer users very early was a sure way to bolster sales down the road when those people became adults. The failure of the model was that there was no smooth path of progression from Lemonade Stand to more "serious" uses later on.
Microsoft has arguably done much better for itself by getting its software into schools later in the educational process, when students were likely to use a lot of the same software as adults with purchasing power. High school, and especially college, proved to be a great way to hook people on a given platform in a way that would keep them on the hook until it was time to buy computers for themselves. A number of discount programs have been used over the years to get a few of these computers into high schools and colleges where students could use them. As business use of Microsoft's software offerings grew, so too did the need for colleges to offer such software for students to learn to use as well, alongside the more traditional university platforms such as Unix and mainframe systems.
As mainframe systems fell by the wayside, offering less computing power than x86 systems per dollar spent, Microsoft gained more and more of a foothold. Ultimately, MS Windows became an inescapable part of the landscape in higher education. As familiarity with computers becomes a more important part of the curriculum for more and more degree fields and, more to the point, as access to a computer with some basic software offerings becomes a more important part of actually completing assignments even for classes that have nothing to do with computers, the number of computers a given college needs is growing. While the raw computing power you get from an x86 architecture system is relatively cheap, and getting cheaper all the time, the growth in the number of discrete systems needed is increasing the cost of maintaining computers significantly. MS Windows licensing is a nontrivial part of that cost.
Just as it seemed schools were giving up on Unix entirely, things began to turn around; the fact that open source Unix-like systems can be had with zero licensing costs makes it much more enticing for computer related degree programs to include Linux and Unix instruction in their curricula. In part as a result of this same licensing cost savings, big universities with strong research programs are using a lot of Unix-like systems in research projects and — drawing on the expertise of students — to run some of the school's administrative infrastructure.
Smaller universities and community colleges tend to have the tightest budgets, and thus the greatest need to save money. At the same time, these schools also tend to be the most likely to use nothing but MS Windows for administrative infrastructure. These two facts seem entirely at odds with each other. What could be going on?
Such schools, like any of the bigger universities, effectively have to have MS Windows systems. Too many instructors rely on the assumption that MS Word is available to every student, and too many students in non-technical degree programs rely on the opportunity to familiarize themselves with the software they are likely to encounter in the working world, to simply eliminate MS Windows from the campus. Regardless of what is going on in administrative infrastructure, buying the licenses for all those computer lab and instructor office desktop systems at full retail price would be a monumental expense that no community college or state university is likely to be able to afford.
Microsoft offers discounts for schools, however. In fact, discounts are often so deep that licenses may effectively be free. In some cases, Microsoft will even subsidize hardware costs for schools.
The software giant is not doing this out of the goodness of CEO Steve Ballmer's heart, of course. The reasoning is not even entirely based on the desire to put MS Windows machines in front of every student, biasing them toward that OS over other alternatives before they head out to the working world, though that is a huge motivator. After all, the schools are in the position of needing to have a lot of MS Windows machines regardless of discounts — so a lesser discount would suffice much of the time.
Microsoft makes deals with a lot of schools in exchange for these discounts. For instance, in exchange for reducing the cost of licenses for OS deployments the school would need anyway, Microsoft can ensure that some schools keep Linux-based systems and other non-Microsoft OSs out of the standard computer labs. In exchange for these licensing discounts, Microsoft can also encourage schools to pay for server licenses for administrative infrastructure — Exchange for email, IIS for Websites, and SQL Server for databases, for example. Schools that would otherwise have opted for a free deployment of some open source OS for the mail, Web, and database servers, saving themselves a few thousand dollars in licensing solely on the servers, will instead get all those things while saving themselves tens of thousands of dollars in licensing between servers, desktop systems, and productivity software.
What it really boils down to is that Microsoft is using a ubiquitous need for some MS Windows systems in colleges as leverage to make MS Windows as much the only OS in such environments as it can manage. If you have ever wondered why your college seems to use MS Windows for everything and seems unwilling to introduce more open source Unix-like systems into the network, the reason may be license discounts.
It may seem counterintuitive that a discount on a license that costs money could actually end up cheaper than a completely free open source license. When large numbers of systems need to be deployed with that non-free license attached anyway, discounts can make all the difference in the world.