Microsoft swoops in to claim Nigeria Linux deal

Linux vendor Mandriva thought it had signed a deal with Nigeria to equip elementary schools with computers and software.

Mandriva, based in France, had agreed to supply a customized Linux OS for 17,000 Intel Classmate PCs, which are rugged laptops aimed for educational use in developing countries. But in an unorthodox twist after the deal was completed about three weeks ago, Nigeria has since decided that it will strip the OS from the Classmate PCs and install Microsoft's Windows OS instead, said Francois Bancilhon, Mandriva's CEO, on Friday.

"It is clearly a disappointment," said Bancilhon, who wrote a seething blog entry to Microsoft's CEO, Steve Ballmer. "We do feel the power of somebody much stronger than we are. We are a tiny company."

The soured deal is an interesting study in how Microsoft, with its vast resources and influence, can sweep in and snatch deals from smaller competitors. Microsoft views open-source software, which is usually free, as a huge threat to its businesses, particularly among governments in cash-strapped countries.

The public manner in which Bancilhon aired his frustrations, along with the question of why Nigeria would make a software deal and then change its course, make the situation all the more interesting, suggested Laurent Lachal, an analyst with Ovum.

"Microsoft is definitely using its muscle to undercut its opponent," Lachal said. "That's a standard practice, not just of Microsoft."

Mandriva knew it was battling the software giant in the weeks before the deal closed, even lowering its prices after counteroffers from Microsoft, Bancilhon said. The offers remain confidential.

Mandriva thought it had won the deal and issued a news release Tuesday on its Web site. But on Wednesday, Mandriva's partner in Nigeria, Microbyte International, received an e-mail saying that the news release was inaccurate because the deal had fallen through.

The e-mail came from an official with the Technology Support Center (TSC), a company that's helping the Nigerian government deploy the laptops, said Dele Ajisomo, who owns Microbyte International. The e-mail, shared with IDG News Service, says that TSC, which is deploying the PCs, had reached an understanding with Microsoft to convert the Classmate PCs to Windows XP.

"The CMPCs (Classmate PCs) shipped to us with Mandriva Linux installed will be loaded with Windows and Office prior to shipment to the recipient schools," the e-mail said. "We acknowledge that we did issue a purchase order for 17,000 Mandriva licenses, and we have paid for part of that number."

Ajisomo said between 1,500 to 5,000 of the Classmate laptops have already been deployed, and so far, the recipients of those laptops have been happy with them.

"There is something fishy going on," Ajisomo said by phone from Chicago on Friday. "I was really, really very surprised."

The switch comes as Microsoft and TSC appear close to completing a marketing agreement. According to documents shared with IDG News Service, Microsoft would give TSC $400,000 for a three-month program to produce a marketing campaign around the deployment of the Classmate PCs, which now would have Microsoft's OS.