Microsoft's DreamSpark – What a Giveaway

Yesterday, Microsoft announced DreamSpark – an ironic name, since it actually lays bare Microsoft's worst nightmare: that more and more of tomorrow's programmers are growing up using free software for their studies, which means that as they move out into the world, there will be less and less demand for Microsoft's tools, and even fewer programs written for its platforms. Its answer? This:

Microsoft Corp. Chairman Bill Gates today will unveil a software giveaway that will ultimately provide millions of college and high school students around the world with access to the latest Microsoft developer and designer tools at no charge to unlock their creative potential and set them on the path to academic and career success.

The Microsoft DreamSpark student program (http://channel8.msdn.com) makes available, at no charge, a broad range of development and design software for download. The program is now available to more than 35 million college students in Belgium, China, Finland, France, Germany, Spain, Sweden, Switzerland, the U.K. and the U.S. Broad global coverage, as well as an expansion of the program to high school students around the world, potentially reaching up to 1 billion students worldwide, will continue throughout the next year. Gates will share details with students and faculty at Stanford University as part of a U.S. and Canada college tour that kicks off today.

“We want to do everything we can to equip a new generation of technology leaders with the knowledge and tools they need to harness the magic of software to improve lives, solve problems and catalyze economic growth,” Gates said. “Microsoft DreamSpark provides professional-level tools that we hope will inspire students to explore the power of software and encourage them to forge the next wave of software-driven breakthroughs.”

With the DreamSpark programme the company says in the plainest possible terms that its business model has failed. Despite its repeated assertions that its products are worth paying for because they are better than open source alternatives, its giveaway proves the contrary: it has admitted that it can no longer compete with free, and that it must now match open source's zero price.

I'd already pointed out this approach in a previous post here on Linux Journal, noting how increasingly it is being forced to give away its products in developing countries in order to fend off the growing attraction of free software in those markets. That strategy was sustainable while it continued to sell its products for good margins in its main markets. But two factors are changing the situation dramatically.

The first is the current move to give away copies of its development tools, on what it clearly hopes will be a massive scale. This is bound to impact its bottom line, even if only a relatively small proportion of students and educational establishments now no longer need to pay for such software.

The other factor is the current attempt to buy Yahoo. Microsoft has admitted that if its offer is accepted, it will need – for the first time in its history – to take on debt to pay for it, and on a massive scale:

Microsoft would have to borrow money for the first time to fund its takeover of Yahoo, the technology giant admitted today.

Chris Liddell, the Microsoft chief financial officer, told analysts and investors in New York that the company would pay for the bulk of the deal half in cash and half in stock.

The rest of the $44.6bn (£22.3bn) deal would be financed with an undisclosed amount of credit.

What that means is that it must squeeze as much money as it can from its operations to fund that debt and still pay dividends to shareholders, who will be looking for some payback from the Yahoo takeover. Giving away software is the last thing it would want to do in these circumstances, and the DreamSpark announcement shows just how worried it is about the future.

Truly, then, this is an unprecedented “giveway” - of Microsoft's worsening plight.

Glyn Moody writes about open source at opendotdotdot.

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Linux Lovers Make Me Laugh

Hurleyman's picture

Linux lovers make me laugh because they are always the first to go off on Microsoft for everything they do including making money. Sont get me wrong I have nothing against Linux in fact I have tried for years to incorparate it into business but every time it fails. It seems like every linux article is out against Microsoft and I can't fiqure out why. They are attacked over and over again for security, viruses, and price and the funny thing is I have never had a issue with any of these things. The people that complain about these issues are usually people who shouldn't be using a pc anyways. I often wonder if Linux was on as many machines as Microsoft if the roles weren't reversed. And I love how everyone talks about Linux being free and better for business when by the time you add it up Microsoft is by far cheaper in the long run than Linux. With Microsoft you pay the price up front and you get a stable product that for the most part has no need for support where as Linux offers their products for free up front for the most part but then you got to pay for updates and service agreements and by the time you add those cost up Microsoft blows them out of the water. And I know most of you are boiling over at this point but come on look at real life 90% of the businesses out their are computer illiterate and the last thing they want to do is either learn the command line just to install a simple application or hire someone to set it up for them. Thats the beauty of microsoft easy to setup and maintain simple double click installs lifetime of updates. So thats why Apple and Linux articles make me laugh, always tearing down Microsoft that in my mind has better products and in the long run cheaper. Oh and by the way Microsoft has been offering this stuff free to students for years the only differance is that its now available to every student and not just students taking the classes that require the software. I think it has nothing to with Microsoft trying to save themselves with the youth. It will be 20 years from now when we see Microsoft starting to worry about losing business.

Re: Linux users make me laugh

Anonymous's picture

Though I'm not a Linux user (but getting close to being one, I had to comment on this "stable product that for the most part has no need for support".

LOL. Does stable include always doing a "restart" to troubleshoot a pc? And doesn't need support??!!! *shakes head*, Microsoft is the butt of jokes because they need to clean up their act.

Regards,

Natalie of Gadget Info

Linux Lovers Make Me Laugh

Anonymous's picture

As far my observation over last couple of years, open source is fav. choice for systems developers (now days terminal apps too). When it comes to a lehman or a desktop oriented users, it's obviously windows. And i think both are at it's place, where they have to.

Yo! Hurleyman boy

Anonymous's picture

Tell me why Microsoft Tried to RIG the entire ISO OOXML process last fall.

Linux Lovers Make Me Laugh

Hurleyman's picture

Thats a good questiom. I have read both sides and I honestly don't know what their true intentions were. Most the the reports only give us limitied byassed information. I don't agree with everything Microsoft does but what company does?

We obviously know the reason...

Robert Halloran's picture

The vast majority of MS' profit comes from Windows & Office, and the margin is better on Office. Anything that could potentially disrupt that cash pipeline is very literally a mortal threat to MS' bottomline.

ODF already has ISO approval, which would give it preference for governments' usage, and the trickle-down effect could bring it into businesses doing government work, schools wanting to teach to a 'public standard', etc. That makes it crucial to MS to get their OOXML approved, or risk some degree of being marginalized.

Adding ODF support and competing on price doesn't work for the reason above. They need that lock-in to keep the dollars (Euro's, yen, ...) coming in. Anything they do to get there is simply 'good business' on their part.

"Anything" they do to get there is simply 'good business' ??

Anonymous's picture

Anything = the end of the little guy in his garage trying to get started.

It was ok when Bill Gates did it .

Mabey that is why he wants to be "seen" as a good guy when he redistributes the monopolistic profits he gained over the years, at the expense and the future careers of generations of programmers crushed by Microsoft.

I don't care how much

Anonymous's picture

I don't care how much software bill gates gives away. I 'd rather use open source programs and write programs in open source languages anyday. Afterall i find them so much easier to use than any micorsoft product, and coding in any microsoft invented language seems so convulted compared to something like PHP.

(http://channel8.msdn.com)

Anonymous's picture

...And also spreading more MS software along the way. Silverlight is needed just to get started. Does anybody know if OOXML is the second requirement?

"Your browser may not be supported by Microsoft Silverlight.
Please visit http://www.microsoft.com/silverlight/system-requirements.aspx for more information."

Maybe ... maybe not

Agnomonus's picture

I think you may have vastly underestimated Microsoft and the sagacity of the DreamSpark initiative, but I recognize you have your own axe to grind and it must be at Microsoft's expense. I guess time will prove how prophetic your utterances truly are, but I don't think I should hold my breath waiting for Microsoft to be swept off the planet by open source.

Not a huge new move - MS has been doing this for 5+ years

SouthBay_jay's picture

Having recently come from school, I'll fill in a piece of the market information for you and the readers ...

I don't think this giveaway appears to be in any way "changing the situation dramatically". Most tech students
know that Microsoft has been providing dev tools to teachers and students for free for 7+ years in a program called MSDN Academic Alliance. They actually give away all dev, design, and ERP tools including XP, Vista, etc.

This appears more like a new trying to build a new distribution channel or a move to garner press.

I wish that Adobe would follow this lead - their design products are really expensive for students - even with the student discounts.

Above all, I think students are best served coming out of school knowing the FOSS/Linux/Java platform AND MS platform. I know I was.

Thanks

Glyn Moody's picture

But that's interesting in itself - the fact that they felt the need to sell at as new, or bigger and better.

Microsoft is still one of

zaai's picture

Microsoft is still one of the most profitable software houses today, clearly an indication that its business model is not quite failing yet.

Giving away development tools has nothing to do with a failing business model. It has everything to do with a strategy to ensure there is a demand for the OS, its flagship Office, and other Microsoft products for the coming years.

If College and University students switch to Windows because of free tools, what OS will they write software for? What OS will they choose when they become decision makers? That would be Microsoft Windows.

In addition, the availability of free utilities on Windows will make a switch from to a Linux based OS less attractive.

Its a strategic decision which makes sense.

But is it as profitable as it seems?

Glyn Moody's picture

There are a number of interesting hints that things may not be so rosy financially for Microsoft as they seem.

Microsoft's Plan: Focus to Hook a Younger Market (One,Two,Three)

Anonymous's picture

Three things come to mind.

One, the young market focus of DreamSpark, Two the Yahoo takeover timing and this DreamSpark announcement, and Three the Microsoft user "Hooks" that are common to both One and Two.

"The Microsoft DreamSpark student program (http://channel8.msdn.com) makes available, at no charge, a broad range of development and design software for download."

"Download" (IP address) is the keyword. I am sure you will have to "register" these products (so Microsoft can enhance its profile of you).

Then combine that with the Yahoo demographic.
The Wealthy Use Google, The Poor Use Yahoo

Eric Zeman of "Information Week" asks, "Why would Microsoft want to buy a company that caters to teenagers?" Eric continues, "as younger people are falling into the purchasing patterns they will likely follow for the rest of their lives."

Then consider the massive number of E-Mail Accounts that Microsoft would Control when it takes over Yahoo, to give "Big Brother" a new home in Redmond, Wa.

So, is Microsoft's new plan to make money selling software? Or, is Microsoft's new plan to buy into "that market — advertising — is itself a bubble. "

Or does Bill just want to be your big brother?

Drug peddler

Rajagopal Swaminathan's picture

Since when drug peddling to school and college students is legal?

This is equivalent of 'vaccinating' young people's mind with 'proprietary software' virus for free. The difference here is they become indifferent to freedom and prefer slavery. Nice "Nazi type goebbelisian" move. I don't have to spell out the consequences to the esteemed readers.

I understand this is how the drug mafia works....

Regards,

Rajagopal

Give it away and watch

Samir Chopra's picture

I wonder how long it will take before MS realizes that its not just the price that will matter but also what they let people do with Dreamspark - take it apart, play with it, change it. Surely, there must be folks within MS that get this?

the drug dealer again...

Anonymous's picture

Give it away for free... then when they are hooked... make them PAY!!!! and PAY!! and PAY!!!! same old microsoft..

Not against open source

Daniel Murguía's picture

I think Microsoft is going against the distribution of "pirated" software and not against open source.

if you don't like it, do something...

craneum's picture

It's probably well accepted that the open source, public commons movement (riding on the strengths of the Linux kernel and distros that use it) has already forced microsoft to provide higher quality software in the past. I have been a supporter of Linux OS distros for 10+ years. I love gentoo. Gentoo rocks and its the underdog, Ubuntu is a behemoth and only Red Hat is evil. (if that last statement seems absurd, read on)

This article has every right to slant to Linux. Its the Linux journal for chrissakes. What is missing in my opinion is information about what students and teachers are really doing. It takes a long time for faculty to re-develop a teaching program. It could be a couple years before enough curriculum is available to teach from. Right now, depending on the school, students learn everything starting with VB to Unix shell within the short span of a couple years. I had OS400, Unix, BASIC, HTML 4, Network Tech (based on MS curriculum), Novell and Electronic Commerce courses. If the curriculum is and the product is still relevant in the market, it will be taught.

I work at a company of 500+ in the Architecture industry. We use Autodesk products for most of our production work. Autodesk currently only offers Windows versions of it's software. Therefore, our workstations use Windows. If we could use a Linux based OS, I would be happy with that AS WELL but that would mean that I would have to teach alot of people that barely know how to use Windows to use that OS. Not that KDE or Gnome is harder, but just different. Then, when they leave, the likelyhood is that they will go to another Windows company. I would do it though, and that would probably do more to support the community than whining about Microsoft providing its development tools for free.

I would have to guess, because I dont have time to research right now,(ive already spent too much time writing this) that excellent IDE's like eclipse, Netbeans etc... are really making inroads because of their cross-platform and quality documentation. Without windows versions, I don't think this would be the case.
Applaud Microsoft for providing part of what students need to become viable in a challenging industry but remember the limitations of their product; it can't easily be ported for use on anything outside of Windows.

For those of you that really want to hurt Microsoft: Get off your a$$ and share your knowledge with a student (if you have any and if you aren't a teacher already).
Of course this also applies if you just want to help someone.

cant wait to feel the love.

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