A few years back Microsoft launched a website for European students called Student Options (SO), where they could buy online cheap versions of the most popular Microsoft software. Part of the idea behind the scheme was that by setting a very low price, students would buy authorised software rather than pirate copies. The site was never very successful although it still exists today and is run by US e-commerce company Digital River.
While SO limps along, Digital River and Microsoft have launched a pilot programme in Australia called Itsnotcheating.com. It looks like SO, albeit with an Ali G makeover, but the real difference is the prices of the software. Go to SO and MS Office Professional Edition 2003 costs £62.99 but at Itsnotcheating.com MS Office Pro Edition 2007 is just A$75 (£33). That’s a huge difference. The site is obviously an international beta site because if you try to order before you get to the checkout you get the following text on screen. ‘Any digital products sold to students with a billing address in the European Union will have a VAT (Tax) charge applied’. Unlike Apple and eBay who have their tax domicile in Luxembourg and so charge VAT of just 15%, Microsoft charge all EU customers on Itsnotcheating.com the full UK rate of 17.5%. The other anomaly in this story is that Minnesota-based Digital River have a section on their website for client testimonials – these include companies like 3M, Symantec, Staples and H&R Block, but not Microsoft.
From a business perspective what Itsnotcheating.com shows is the change in the IT balance between students and their institutions and the competitive threat to Microsoft from free tools like Google Docs. Once upon a time institutions were the ones buying boxes and software, but according to Ray Fleming from Microsoft, up to 85% of HE students already have their own laptop or desktop when they enrol. This means that selling to students is now becoming far more important and what institutions are focusing on is safe connectivity to their networks for their students’ computers.
The bottom line here is that selling to students will become more of a strategic priority for Microsoft, although whether this will help stave off the emerging competitive threat from services like OpenOffice, Google Docs, Zoho and others, will be interesting to see.
www.digitalriver.com
www.itsnotcheating.com.au
www.openoffice.org
www.zoho.com
