updated 12:45 pm EDT, Wed October 20, 2010
Microsoft NYC deal must separate software
Microsoft on Wednesday reached a deal with New York City to supply software directly to local government but which avoids the controversial practices of earlier years. The deal will give copies of Office and other software to as many as 100,000 people in city agencies but will prevent Microsoft from demanding that software come in bundles. Workers will be put into three different tiers depending on the apps they need and will pay less for the reduced bundles.
It would also use the cloud-based versions of some Microsoft apps and store data for about 30,000 of the workers online. The combined plan should save about $50 million in software over the course of five years, New York City officials said.
The deal is a rare recent victory for Microsoft and was likely intended to fend off competition from Google's Apps platform, which has lately been stealing share and undercutting much of Microsoft's Internet strategy. Offline copies of Office can cost dozens or hundreds of dollars per person for a one-time charge, while Office 365 costs several dollars per month, per person. Google charges a flat $50 per person for an entire year.
Unbundling is a rare step for Microsoft, which has usually preferred mandatory licenses for its software whenever making a deal. The strategy helped marginalize Corel/Novell WordPerfect over the past two decades and also sparked some antitrust concerns, especially when Microsoft charged a per-computer Windows license even for systems that didn't have Windows installed.