Microsoft offers free software for start-ups

LOS ANGELES--In its boldest bid yet to win the affections of emerging businesses, Microsoft on Wednesday announced a program that will allow some start-ups to use its server software free of charge.

Dubbed BizSpark, the program will be open to private companies that have been in business for fewer than three years and have less than $1 million in yearly revenue. Companies will also have to be recommended by one of Microsoft's many for-profit, nonprofit, government, or academic partners.

Lewin

Dan'l Lewin, the former Apple executive who heads Microsoft's efforts to reach out to start-ups, said the fact that the program comes as the economy is slowing is a coincidence.

"There's plenty of lore about all the great companies that have been started in a down economy," Lewin said. "I think the good companies will hunker down and do well. We'll do our best to help them."

In addition to getting free software, participating companies will be able to take part in an online directory of start-ups so they can network and reach potential customers, Lewin said.

Those selected for the program will be able to get access to a range of products, Lewin said, from Visual Studio to Windows Server, SQL Server and SharePoint, among others. Microsoft's customer relationship management software will soon be an option as well.

That said, Lewin said it isn't an all-or-nothing offer. He said that companies can choose a mix of Microsoft and other software, including open-source products.

"They don't have to only build on our stuff," Lewin said.

Companies will get Microsoft's software free of charge for three years and will have to pay the then-prevailing licensing costs thereafter, Lewin said.

To beat my readers to the punch, yes, I'm familiar with the phrase "the first hit is free."

That said, I'm curious what readers--and particularly start-ups--think of the program.

Free + total cost of ownership still makes it a more expensive platform to use than my current company's network.

This smells like a crack dealer on the city street corner giving away samples to get people hooked. The only difference is the crack dealer would go to jail for his crimes, where Gates gets away with it even though MS continues to break the law.

[gustown]

Dude, this is not the 80's get over it. Microsoft is doing a good thing. Many people that do not have the resources available can take advantage and use the services fro free. There are a lot of startup that would use the services regardless, so why not do it for free. You always have to remember that there are many alternatives out there, if you do not like Microsoft move on and get over it.

[Vegaman_Dan]

Linux has been doing this for years as well. Give away the product, but when it comes time to get support for it, then you pay for that on the back end. I don't really see much of a difference here either.

But I admit I had the same thought of a dealer in a back alley offering software products under his trenchcoat.

"The first one's free, buddy...."

[plbyrd]

@Vegaman_Dan

The difference here is that MS products are addicting, and FOSS products are not.

[Vegaman_Dan]

plbyrd wrote:

"The difference here is that MS products are addicting, and FOSS products are not. "

Just because you don't pay for the product up front doesn't mean there isn't any cost to using it. That's a common misconception when people don't factor in support and admin costs.

But in any case, people choose what they will and that's all good.

[wolivere]

"The difference here is that MS products are addicting, and FOSS products are not."

Very correct, I have seen Linux ripped out in may instances due to the TCO going backwards over time. Often the MS product win's out because support is easy to get. And for the most part it just works.

[unknown unknown]

Lets not confuse addictive with proprietary. Migration is a pain, and Microsoft is exploiting that fact. Three years, make too much money, or get acquired and you get owe $100 plus you get switched to standard license fees for that software. It's a deferred payment plan, you're either going to go out of business, end up paying for software, or to migrate to something else.

"The difference here is that MS products are addicting, and FOSS products are not."

The why is LAMP so popular?

[The_Decider]

Vegehead,

The difference is that the foolsih start up that does this will have a huge bill in a few years or they will have to move to another system which will cost a lot of money to port it.

No one ever has to buy support or spend any money to get and use the high quality OSS tools forever.

[Len Bullard]

It's a bold idea. In a time of collapsing markets for bigger iron, problems of managing open source, and inflated expectations from the election, nimble fast movers can build smaller simpler versions based on the requirements from the last four years of spec'ing infrastructure software over virtual stacks. Three years is about right for getting from concept to market with a small team.

Excellent.

[rapier1]

After three years you're either baked or ruined so the time line is good. Some are going to say "they don't need this! they can just use X, Y or Z!" which is true - but in some industries standards are built aroudn certain product sets. If you want to sell to those industries then you need to understand and be able to work with those product sets.

[laxmanchip]

I'm wondering if the site got hacked...

http://www.microsoftstartupzone.com/ forwards me to http://72.15.199.215/ and the Free Software link kicks back a 404 - NOT FOUND error.

When I ping www.microsoftstartupzone.com I get a different IP; 67.212.138.4.

Is anybody else seeing this?

[Seaspray0]

I don't see any round robin used on the DNS; I only got back the .4 IP. They're probably spreading the load by using a front end webserver that redirects to a bank of webservers using a load ballancer.

[Penguinisto]

@rapier1: Yes and no. Sure, MS Office is pretty much an unofficial std. in any business environment, but the paradigm stops there. There are no industries (save for commercial software development) that require Windows products.

As for the program? Yep - first hit is always free. Get 'em hooked and locked-in, then you can charge them six figures a year in licensing fees - just low enough to make switching seem too painful and expensive, but high enough to wring 'em dry over the long term. High-end hardware makers (esp. folks like Cisco) are really good at that too.

Startups with a 3rd-year IT budget of, say, $1.5m/year, will expect to pay 10-12% of that budget on MSFT licensing alone. I can buy a NetApp SAN w/ multiple TB of shelf space --each year-- for that, and have change left over. I can grab a Cisco 4000-series switch --each year-- for that. I can lend the cash to HR and hire a very good sysadmin.

Something to think about...

/P

[rapier1]

While what I said does apply to Office but it wasn't really directed at that. What we've found is that in say, the health care industry, there are a lot of practices that are built around MS solutions. Not Office, but MS SQL, Win Server, IIS, and so forth. If I walk in there trying to sell an application, perhaps a DB driven intraweb application, it would be useful to be able to at least *say* that I can leverage their existing expertise and infrastructure during integration and deployment. Once I make the sale I can try to convince them to move to a different environment for hosting the application. However, I don't want to be turned down because I don't understand or am unable to work with a widely deployed compute environment.

[Penguinisto]

Even in the Healthcare industry (where HIPAA is the only real differentiator), MS solutions (esp. the ones you mentioned) have analogues. If a vendor comes in to any industry saying that they only support one type of infrastructure setting, then the customer can very easily dismiss the vendor and check others.

You do have a point in that if the industry is highly niche, that you may be stuck in some form or fashion, but Healthcare is not really niche enough for that condition.

As for your last sentence, that doesn't make sense in the way you fit it together. As a vendor, you should have a wide enough product range (and enough skill on staff) to be able to say that at least some of your products support open standards, no? SQL '97 is an open standard, and making an application that can support more than one DB type (e.g. MSSQL, Oracle, MySQL) is almost trivial - the main diffs lie in the connection syntax. If you get turned down becuase you cannot match the environment, then the fault lies with your products, not with the customer per se. Linux is widely used enough in the enterprise that most vendors (Business Objects, to grab one example) happily accommodate multiple platforms.

[Vegaman_Dan]

The nice thing about going with a commercial product is that you get product support. That's something you don't get with most of the alternatives. In a startup perhaps they don't have the money to pay for support like that and a free solution is certainly attractive.

I'm curious about this six figure a year license fee. What product has that? Please enlighten the public with this one. I'm curious about that one, I must admit.

It's good that you can buy all that hardware, but you're making the mistake of comparing a Cisco network switch to a Microsoft software product like Sharepoint Server.

To that effect, I can also spend $100K on a Tesla roadster and ... well, that doesn't have anything to do with Microsoft software products either, so you can see the confusion you are causing by comparing network hardware costs with unrelated software license fees.

You may want to restate your comments in a better way, I think. You may have a good point, but your comments are comparing hardware to software which are not related and that is confusing the point.

[rapier1]

I fear that I'm not clearly expressing myself. I see one of the advantages of this program is that it gives small companies an opportunity to learn, via hands on experience, more about the environments they may be working in. For example, I founded a company a few years ago writing cardiology web apps. These were all developed in a typical LAMP environment. It has a lot of advantages, works well, and significantly reduced my licensing costs. However, when we started the sales process we'd run into push back from IT execs who run in homogenous Windows environments. MS SQL, while not driving some of the major EMRs, does drive a lot of the ancillary applications that make use of that EMR data. In a sales situation this didn't seem like the best time to educate people. So we wrote an abstraction layer so we could say 'yeah, you can make use of your existing MS SQL farm if you like. You don't have to and we suggest that you use the RDBS we suggest but the choice is yours'. In order to do this we had to sink money into an MS SQL license that we really could afford at the time. A program like this would have really helped us. Its really not an ideological position, its a pragmatic decision.

Also, I'd say HL7 is a much more significant differentiator than HIPAA.

[Penguinisto]

@rapier1: thx for the clarification.

@Dan: No confusion here (or for anyone else who's literate). An IT department has to spend money on both hardware and software (and services, and...) Since a departmental budget for IT is (more often than not) fungible, the money you're not wasting on CALs and CD keys can be spent on hardware, or even headcount if you can work a deal out with HR.

For someone who claims to work in the Entperise, this really shouldn't be over your head at all, Dan.

[gggg sssss]

rapier man
If you actually are/were doing software development you would have baught into msdn and devloper licences. If you cannot afford $100 then your business plan obviously was not worth the whine

also, a 1.5 m business is a 10 man business. 5 - 10 computers. How could anyone justify paying anyone 100K to be sysadmin for that?

[unknown unknown]

@ gggg sssss there is more to it than $100, you also get transitioned to standard license fees.

[Penguinisto]

@ g's and s's: err, you mis-read it - the IT budget (not the entire business) gets $1.5m per year. ;)

[rcardona2k]

Is a worldwide program or only for US start ups? Sounds like welfare to me. The rationale behind this altruism isn't clear. Why is Microsoft putting start-ups on dole, that makes them less competitive.

There's plenty of free Microsoft software already available like SQL Server Express, Hyper-V Server, Visual Studio Express that would work. No thanks Microsoft.

[Seaspray0]

I agree with you rcardona2k, and those products you mention work well for small startup businesses. I still support a small business that's on a workgroup. But if his business required greater security between users (i.e. law practice), I would have him on a domain using a server. Each business is unique in their needs.

[honeyboner]

It seems almost pointless to have an open comment section about anything that Microsoft does because they vastly consist of the Linux + Apple comments recycled from the slashdot parrots that spawn them. Enough already we heard your story the first three million times.

Regarding MS giving a 3 year license fee holiday, that's great for anybody who can build a business model around it and for the record if they're a software or service shop, once they're profitable - going over to one of the action pack subscription or certified programs will give them nearly free licenses for development perpetually. For the record, I work for a heterogeneous platform-neutral company that cares more about customer needs than technological religions.

If you abhor MS, go ahead and use something else but please stop telling other people how bad what they've chosen is because it's not what you chose.

[Penguinisto]

Actually, it ain't MSFT per se, it's the unnecessary costs that the unsuspecting customer gets slammed with once that 3-year period is complete.

Those "action pack" and "certified" programs aren't cheap either, and you have to be very careful about their use, since most uses of those licenses would not hold up under a BSA audit.

[honeyboner]

MAPS is $250, Empower is $375 and MS Gold certified is 2.5K/yr.

If you can't afford that then you probably can't afford the personnel to run your business.

[Penguinisto]

Those have strict limits, and often require a certification process that costs a lot more in time and money than the mere prices you quote.

And again, if you get caught using those for uses other than the narrow ones outlined in the EULAs (e.g. using them for any part of your infrastructure), your company will be in Chapter 11 and paying massive BSA civil fines faster than you can say "but..."

[honeyboner]

Lets try this again $250 - $2500 is cheap in my book but I fully respect your right to your opinion.

MAPS -> use for business operations pretty much unrestricted
Empower + Certification -> use for development

Too restrictive/expensive for you still? No probs, use LAMP if thats what serves your customers and business model best.

[enovikoff]

I think honeyboner missed the point. I run a cloud computing provider that is platform-neutral, but I do get exposure to our customers' business models because they are often start-ups or SaaS companies that are carefully considering us against the other alternatives. What I see is that very few of them have per-customer or per-user costing models that have room for Microsoft's licensing and TCO, which is why many use Linux and open source. The TCO disadvantage is often critical for cloud computing, because of the fact that per-user or per-customer memory consumption is so high that it increases their cloud computing bills significantly over Linux and open source. The ones that do have costing models that allow for Microsoft products generally don't have a choice because they have embedded technology that requires Windows, and they will definitely be helped to make it through the financial narrows by this offer. The biggest catch is the recommendation, because the startups I see are often not associated with larger companies or academia.

[mbenedict]

Startups != tech. The startups which will benefit from this offering may not be in the tech sector at all... they could be in the food industry, textile, financial, healthcare, insurance, fashion, etc., who knows what. They're not IT shops and may not be interested in doing heavy development, engaging in cloud computing, becoming a SaaS provider, etc. Most will only need a bunch of workstations, ms office, exchange, some internal databases in Access or SQL Server, a CRM system for sales, maybe SharePoint, and some accounting system.

These startups want to buy COTS and be done with it. They like that software from Microsoft already play nice with each other generally. They don't want to deal with LAMP and having to figure out how to integrate everything themselves. They don't want to get bogged down in technology. Software licensing is just a marginal cost of doing business to them, running on leased hardware; the real $ spend is for full-time employees and in the beginning they'd need roughly the same number of heads to run either MS or Linux/open-source anyway.

So going Microsoft makes perfect sense for them... especially if the initial cost is zero.

[honeyboner]

I don't think I missed the point, let the market decide. Somebody starting a business can cost out MS vs LAMP on your cloud, Amazon EC2, Google and Azure. They do the math, make their choice and it's off to the races for them. Bravo to them for doing their due diligence and picking what's best to serve their customers regardless of the technology chosen. The MS scenario is just a new option to consider to lower the bar.

If MS costing model + TCO doesn't have room for your clients to make money then they shouldn't be using it but they'd be ill informed to do it just because they've heard some bad hype on some anonymous comments on a random web site.

[pbarranis]

The article is conspicuously missing a link to the program. Ina, can you provide us a link or something so those of us interested can go learn more from the horse's mouth?

[nasserd]

"Enrollment in the program is free; however, Microsoft will assess a USD$100 program offering fee at the end of participation in the program, or end of three years, whichever comes first."

An annual payment of $33.33 is quite the discount for an MSDN Premium subscription plus hosting licenses for the portfolio of products Ina has described. That's worth any hassle!

[Seaspray0]

STUFF IT, penguin. All you do is complain about microsoft, and you only tell half truths at best to support your biased opinions. But then again you have good reasons to be so grumpy. Linux is shrinking. It never crested 1% usage since the proclaimed '94 "year of the linux desktop". It's market share in the servers has been declining for the last several years because linux servers are being replaced with windows servers; yes, even the linux webservers are disappearing. Why? Because in the long run, windows servers and clients have proved to be easier to support, maintain and manage with better applications for an equivalent total cost of ownership. Screaming "the sky is falling" isn't going to help improve your job security. You are the one person trying to tell the rest of the platoon that it's out of step. Don't you get it? For every you, there are NINETY of us and growing. The wars over! You lost!

[The_Decider]

LOL

MS share is falling, others are growing.

It is impossible to count the number of Linux machines. I have three machines(2 laptops and 1 desktop) that MS counts as 3 windows machines, but windows lasted 5 minutes on all of them.

This plan from MS is for fools, like every other MS plan. It locks you in and then they start raping you once you are locked in.

There is no need for any MS development tool, nor is there a reason to ever lock yourself into one vendor.