Sun Takes Aim at Microsoft
By Offering Schools Software

Big companies that use Microsoft Corp.'s products aren't the only ones fuming about the software titan's latest pricing policies -- and Microsoft rival Sun Microsystems Inc. knows it.

Many educators in cash-strapped U.S. public schools, which depend on Microsoft software for classroom programs, are also upset. Officials like Diana Wilhite, technology coordinator for the tiny Americus School District in east-central Kansas, says Microsoft's recent plan to move more customers to multiyear contracts could raise her costs for crucial products like Microsoft Office, with word-processing, e-mail and spreadsheets, among other programs.

COMPUTERS IN THE CLASSROOM • Sun's McNealy Sees IT Slump as an Opportunity to Reintegrate 09/03/02   • Apple's Earnings Fall by Half on Drop in Educational Sales 07/17/02   • Apple's Low-Cost eMac PC Is Offered Outside Classroom 06/05/02

So when Sun last spring offered several copies of its competing StarOffice product for a total of $25 -- software she could copy and install on dozens of computers -- it seemed too good to be true. "I don't know how anybody can turn that down," says Ms. Wilhite, who oversees computers and software for Americus's three elementary schools and one high school.

Now, Sun has an even more enticing deal: StarOffice for free. Tuesday, the Santa Clara, Calif., company will announce it is giving away what it estimates to be more than $650 million of the software to ministries of education in Europe and South Africa. Sun hopes the donation will bring StarOffice to 26.2 million elementary, secondary and college students in those regions. Sun made similar donations in Asia several months ago and plans to seed U.S. schools with StarOffice as well.

The donations are a departure for Sun, which previously focused on supplying more obscure software-development tools to universities; the company hasn't worked as closely with elementary and high schools. Sun is known more for its powerful, back-end computers used by big companies, and not for desktop software. Sun didn't even begin charging for StarOffice until this spring, when it announced a more-sophisticated version of the program with a retail price of $75.95.

But Sun and its chief executive, Scott McNealy, rarely miss a chance to try to check the power of Redmond, Wash., arch-rival Microsoft. Indeed, Mr. McNealy and other Sun executives say making money from schools isn't their chief goal as they give away StarOffice, a product not generally considered as full-featured or easy to use as Microsoft's product but one that could be fine for many students. Instead, Sun is trying to destabilize Microsoft's dominance on the computer desktop and undercut its billions of profit from Office, a product many children first use in school.

The prevalence of Office in schools means that by the time students graduate, "they're going to be kind of hooked for life," Mr. McNealy says in an interview. He says Sun also wants to help schools spend less on technology to free up funds for other instructional expenses and to reduce teacher/student ratios. Sun made a point to say its software can run on other companies' operating systems, such as Windows, and work with programs like Office.

GIVEAWAY Sun will donate its StarOffice software to schools abroad, including: France Students: 10 million Value: $250 million Germany Students: 4.2 million Value: $105 million South Africa Students: 12 million Value: $300 million

Microsoft says it constantly works to improve Office for schools, including creating features allowing disabled children to use the product. Sherri Bealkowski, general manager of Microsoft's education-solutions group, also said schools could pay as little as $24 a copy for Office under one new, multiyear deal, down from the $67 or $59 a copy schools had paid with previous plans. Still, administrators like Ms. Wilhite say the new plans amount to a price increase, since schools have to buy new versions of software more often.

Microsoft's Ms. Bealkowski says the company recognizes the special needs of schools, and that Microsoft designed the new pricing plans "to try to be very responsive to the needs of our customers."

However, some school administrators were outraged earlier this year when Microsoft sent letters to hundreds of districts asking them to do audits to ensure each of their Microsoft products was properly licensed -- a process the technology chief of public schools in Portland, Ore., says would have cost $300,000. Such audits are more commonly requested of big businesses, not budget-constrained schools. Soon after, Microsoft, in a rare mea culpa, apologized and said it should have been more sensitive.

Portland's schools, partly as a result of the tangle with Microsoft, are experimenting with the free Linux operating system and software called OpenOffice, a variant of StarOffice.

Some schools have gone even further with Sun products. The Moreland School District in San Jose, Calif., is using Sun machines call Sun Rays -- which also run StarOffice -- in several of its schools to save money and simplify maintenance. Says Mike Jones, the district's director of information technology, "We're going down a path that's not locking us into a Microsoft future."

Write to Rebecca Buckman at rebecca.buckman@wsj.com

Updated September 17, 2002