Microsoft courts governments in strategy shift

Having faced high-profile antitrust cases in both the U.S. and European Union (E.U.), Microsoft Corp. may not immediately spring to mind as governments' favored friend. So it is perhaps not surprising that the software giant has waged a quiet campaign in recent months to change its image from that of monopolist to "good corporate citizen."

Microsoft has been creating a new public sector organization charged with engaging and influencing governments' technology buying decisions and has begun appointing regional and national chief technology officers (CTOs) to head its efforts. It broke out the public sector as one of its key business verticals early this year, and has ramped up investment in education, training, and community projects.

In Europe, where earlier this year antitrust authorities took a somewhat tougher stance against the software vendor than their U.S. counterparts, imposing over $600 million in fines and requiring that the company offer a version of its Windows operating system without the Windows Media Player software, it has grown particularly focused on the public sector market.

At a public sector event in London on Monday, Microsoft announced that it is creating a portal for governments to provision technology from itself and its partners, and that it is teaming with Accenture Ltd. to develop software and services packages for European governments in areas like e-government and public safety.

"In the public sector we have to be consistent, predictable and a good corporate citizen," Pete Hayes, Microsoft's vice president of the public sector in Europe, the Middle East and Africa (EMEA) said at the event.

The makeover is necessary, analysts say, if Microsoft wants to find future success in the crucial public sector market, which is being increasingly wooed by Linux providers that preach a business model much different than Microsoft's own. If the Redmond, Washington, company can change the way it is viewed, from a self-interested corporate giant, to a local as well as a global provider that gives back to the communities where it operates, it has a better chance of protecting its business, they say.

Given the antitrust suits, the rising profile of Linux as a desktop option and new public sector opportunities presented by emerging markets in Europe, Asia and Latin America, Microsoft saw that it needed to take on a community leadership role, said Eric Woods, government practice director at the research firm Ovum Ltd.

"It makes good business sense. The government is the biggest single client in any country," Woods said.

Hayes is clearly aware of the importance of winning over the public sector. "Governments are extremely important in spurring the effectiveness of technology and wide adoption," he said.

According to Microsoft, the U.S. Department of Justice and E.U. antitrust rulings against it have not stopped government customers from working with the company.

"I haven't heard of any difference in our relationship with (government) customers since the E.U. ruling," Dave Singer, Microsoft's worldwide director of partner management in the public sector, said during an interview at the event Monday. Hayes expressed a similar experience: "Customers are moving together with Microsoft like they always have. So far, I haven't seen a difference."