Beware of the Software Pirates

No, I don’t mean watch your back on a Caribbean cruise. While processing a network replacement quote for a local (and well recognized) charity, I found that software piracy is alive and well in Lincoln, Nebraska.

On Saturday we received a request for quotation from a local charity that does a TON of great work for kids in Lincoln. They need to completely scrap and replace every PC on their network and they asked us to provide a quote. To help us understand what they were looking for they gave us an estimate they received from another local Lincoln computer company who has “been serving Lincoln since 1984” according to their yellow pages advertisement.

I started to digest the bid they had already received, understanding the implicit suggestion that we beat their price. The hardware they quoted for the system was decent for what it was going to be used for, and the price for the hardware was agreeable. I was getting myself prepared for a razor-thin margin push to get the job until I read the software section of the quote.

Windows XP Professional with Software Assurance $20.00/ea
Microsoft Office Professional 2003 with Software Assurance $30.00/ea

I called our regional Microsoft representative to find out if there was a program that I was not aware of offering deep discounts on Microsoft Windows XP Professional and/or Office 2003 Professional. Our representative told us the prices seemed “unnaturally low” and that we should call the Microsoft Charity Software team to find out if they had offered the software at a discounted price since the charity had a 501c3 designation.

I called the Microsoft Charity Software Team and they advised me to contact an authorized charity reseller. This group of resellers is a tightly controlled group of companies that are mainly large national providers. Hewlett Packard in Omaha was on the list, so I called them and was shocked at their response.

I was told that the prices that were quoted for Microsoft Software we “substantially lower” than the discounted prices Microsoft offers to charities. I pressed a bit and the HP rep told me that a typical charity would pay $106 for Windows XP Professional with Software Assurance and $88.00 for Office 2003 Professional with Software Assurance. The more the HP representative talked the more concerned I became about this local competitor.

Next, I checked the hardware pricing one more time to make certain the company didn’t pad the price of the hardware to cover the loss on the software. There was not an ounce of padding. The truth is, this is improperly licensed software, according to HP and Microsoft. No company can compete against a provider who is placing improperly licensed software on the computers they sell. We would have had to pay well over $350 for legitimate OEM copies of Office 2003 Professional and XP Professional. How was I supposed to go back to this charity and say that our systems are $350 more expensive than theirs, but you should really buy from us?

More importantly, how am I supposed to warn this charity about the problem? This isn’t the first time Schrock Innovations has crossed this bridge. In 2001 a corporation in downtown Lincoln had problems with their computers and called us in to help. We found that every one of their computers was running the same Windows 2000 license, and that the company who sold them their systems did not provide them with the required licenses for all computers.

We informed our customer, who of course called the system builder, who promptly called their attorney. I did not want this to wind up in a similar situation, so I called the charity and informed them that there were some “irregularities” in the quote they provided to us regarding the legitimacy of the software. I explained the pains I went through to attempt to confirm the price points as legitimate, and advised them that if they did purchase improperly licensed software from anyone they would be responsible for rectifying the situation – not the company who sold the systems.

Our quote has gone out the door today and our price is a couple hundred dollars higher than the quote they received from our local competitor. Even if we don’t get the job, I hope I this charity finds a solution provider who is willing to follow the rules. Until then, there is not too much we can do but try to educate and try to compete on a playing field that, like life, is often unfair.