Is Microsoft losing its grip in Asia?

update A constant barrage of virus attacks and rising costs are challenging Microsoft's dominance in the Asian software market.
Written by Irene Tham, Contributor
update SINGAPORE--These days, any abnormal behavior in your PC or server will likely be blamed on that ubiquitous "bug in the system."

Sadly, the never-ending task of downloading patches only seem to delay the inevitable, as new security holes--in Microsoft's Internet Information Server (IIS) software, for example--are still being discovered.

The problem appears more pronounced for Microsoft operating systems, as the software giant controls over 90 percent of the global operating systems and desktop productivity software markets.

In the past four months alone, worms like Nimda, Code Red and SirCam have wrecked havoc in the Internet world, resulting in dollar losses from business discontinuity, among others.

The last straw for Stanley Ho, a Singapore-based system administrator, came in late September when the malicious Nimda worm attacked half the Windows-based machines under his care.

"We had to patch the servers daily. It's a very time consuming process," said Ho, who works for a local software development firm, which declined to be named.

Nimda and Code Red exploit security flaws in Microsoft IIS--the operating system behind as many as 6 million Web servers worldwide.

Nimda spreads via an email attachment, infecting IIS servers by copying itself across the intranet and appending JavaScript to Web pages that will download the worm to a surfer's PC. The worm then overwrites a number of files across the network.

Code Red, meanwhile, scans for security flaws in IIS servers through their Internet Protocal addresses. Upon infecting the systems, the virus helps online vandals gain control of the servers.

Given the sheer volume of Web defacements resulting from these flaws, experts have concluded that IIS is just not secure enough for users.

Indeed, it wasn't long before Ho decided to throw in the towel.

Immediatedly after the Nimda attack, Ho deleted the Windows operating system from infected servers and clients to prevent the virus from spreading, and replaced them with the Linux operating system. Uninfected computers were also moved to Linux, an open source program that is freely available over the Internet.

At the same time, the 50-man firm dumped Microsoft Office for Sun Microsystem's StarOffice as its desktop productivity tool.

"The peace of mind--from knowing that viruses which exploit Microsoft system vulnerabilities cannot touch Linux--is priceless," Ho said. The company's 40-odd Sun Solaris and Macintosh computers remain unscathed, he noted.

Another sticking point for users is Microsoft's new licensing scheme.

Slated to be launched on July 31, 2002, the scheme commits customers to buying upgrades of Microsoft's operating system and applications for an annual fee.

Although the Redmond, Washington-based giant claims that the cost of the upgrades will be spread over a few years, analysts believe that customers who upgrade infrequently could end up paying more.

Bearing the brunt of the fee hikes would be the small businesses, which tend to upgrade the least frequently of all, pointed out Guernsey Research analyst Chris LeTocq.

Bowing to customer pressure, Microsoft has twice extended the deadline for the licensing change, to July 31, 2002. It has also relaxed its requirement that users must have Office XP in order to be accepted into its new licensing program; Windows 2000 is now the minimum requirement.

Yet despite its position of strength, the company is facing increasing competition from alternative Windows-compatible software like StarOffice.

According to a Sun Asia South spokesperson, StarOffice 6 allows users to read Windows documents, including Windows 95 and XP. StarOffice can also be freely downloaded from the Internet.

By comparison, Microsoft XP charges US$199 for the home version and US$299 for the professional version--not to mention, the additional upgrading costs that would arise from the new licensing scheme.

"Microsoft's recent increase in licensing fees has inadvertently helped make StarOffice more attractive to...extremely budget-conscious organizations," said Guernsey's LeTocq.

The prolonged economic downturn is also making the switch easier for cash-strapped customers.

Earlier this year, a Singapore-based e-commerce solutions provider, which declined to be named, decided to embrace Linux and StarOffice. Prior to the conversion, the nine-man firm used pirated Windows 98 and NT 4.0 programs for its 12 computers.

"Upon joining the company in January this year, I insisted on the change to Linux, as we needed to get 'legal'," noted its chief technology officer.

"I dropped Windows to save on cost," he said. Original software would have cost him US$209 for each copy of Windows 98, and US$809 for a five-client access Windows NT 4.0 license.

"With Linux and StarOffice 6, we have what we need to effectively share spreadsheet, word processing and presentation files, and collobarate with other companies," he noted.

Thus far, users seem pleased with the freeware.

"StarOffice 5.2 had some really nice features that prompted me to upgrade to version 6...not bad for a Pentium 133MHz with 32MB RAM. Let's see you run the latest version of (Microsoft) Office on that," said one user.

Another recounts: "It may not have all the whiz bang features of Office 2000 or XP. Then again, if it (StarOffice) handles 99.9 percent of the office requirements, who cares about the remaining 0.1 percent?"

Natasha Kwan
Microsoft Singapore MD

Microsoft Singapore managing director Natasha Kwan cautions that there is no such thing as a free lunch.

"In this world, nothing is really free. You might want to ask what is their (Sun's) motivation for providing free software," Kwan countered.

She also claimed that "no one platform is really better," although she admitted that Microsoft has to "do a better job" in making IIS more secure.

Kwan stressed that the company is "committed" to delivering a better product. One example she pointed to is the Strategic Technology Protection Program (STPP).

Introduced in early October, the first part of the program (Get Secure) provides customers with a security toolkit that consolidates software patches, fixes and updates. The next portion (Stay Secure) is longer-term, and includes automating Windows security updates and releasing version 6 of IIS with the highest default security settings.

Whether customers will buy into this promise is another thing altogether.

Christopher Hwang
Exubient CTO

"Most companies just accept the fact that they need Microsoft to prepare documents and communicate with other companies," said Christopher Hwang, chief technology officer of Exubient Pte Ltd, a locally-based e-business solutions firm.

"Even when surfing the Web, you will find that a site looks and functions best with a Microsoft browser more often than not," he noted.

However, Hwang firmly believes that many smaller-sized customers in Asia will eventually drop IIS. Exubient, which employs about 10 people, has been using Linux and StarOffice for several months now.

"There are open source variants for nearly every conceivable purpose, and they are cheaper and run better than Windows," said Hwang, who has been an open source advocate for six years.

"In fact with the new age of applications deployment over the Internet, it does not really matter what runs at the back-end as long as it works for end-users," he added.

So can Microsoft maintain its hold in Asia?

"It is unlikely that Microsoft will loose its grip on the market in the near future, because there is currently no complete alternative or replacement," said Daphne Chung, IDC Asia Pacific senior analyst for Software.

However, the new licensing scheme will not win the software titan "brownie points" with its user base, she said.

In fact, the scheme will push customers to "actively evaluate" alternatives...this is especially true for Asian businesses as they are more price sensitive, she noted.

"The new pricing might cause a higher erosion of Microsoft's market share in Asia Pacific, as compared with other regions," Chung said. "This scheme may also increase the rate of software piracy in the region as companies try to save costs in a bad economic climate."

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