The health service is deepening its involvement with Microsoft, even though some observers have reservations.Steve Mathieson reports

Published: 24/01/2002, Volume II2, No. 5789 Page 5 6

In October, the NHS became the fifth-biggest customer of the biggest software firm in the world when it signed a deal with Microsoft.

The company has refused to discuss the financial details, but health secretary Alan Milburn told a December conference, sponsored by Microsoft, that the NHS was spending£50m to save£50m over three years.

There is also an administrative rationale. The Department of Health says the deal will replace 35,000 agreements with a single licence, which runs until October 2004.

The deal allows all NHS organisations in England to use Microsoft's basic products: the Windows operating system, the Office software suite - including Word, Excel, PowerPoint and Outlook - and the BackOffice software used for central systems such as web servers and databases.All they have to pay is a small sum for the CDs that hold the software.

The deal charges the health service a certain amount for each computer that uses Microsoft software.

So if a trust wanted to use something else, such as the Linux operating system and Sun's StarOffice word-processing and software (both with free-foruse licences), Microsoft would not get paid for those computers.

'There was a mechanism for organisations not wishing to be included, though as far as I am aware, no-one has taken it, ' says Ellen Pirie, head of healthcare for Microsoft UK.

The number of personal computers for NHS staff is increasing fast.Mr Milburn said in December that all consultants should have networked computers on their desks by September 2002.

Microsoft estimates it will have 300,000 computers covered in the deal's first year, 400,000 in the second and 500,000 in the third.

The logic is that Microsoft software would have run most of these computers anyway, so this deal is simply a pragmatic money-saver.

It means that the health service will spend roughly£42 a year per Microsoft-licensed computer, rather than£84.

It will also allow trusts and other health service organisations to standardise on one version of software. 'In the past, It is been almost impossible to get everyone on the same level of software, ' says Ms Pirie, who explains that budget constraints meant only some staff could upgrade at any one time.

But Microsoft makes many people in IT wary. It was for a while valued by the stock markets as the world's biggest firm.While that is no longer the case, it is an organisation with annual turnover exceeding $25bn (£18bn).

Whether it is envy, fear of its dominance or distaste for the way its marketing makes its products beat technically superior competitors, Microsoft inspires something close to hatred in its (increasingly few) rivals. 'It really is mankind against Microsoft, ' claims Scott McNealy, chief executive of rival Sun Microsystems - possibly overstating the case a little.

Douglas Carnall is a GP in east London and a member of the Open Source Health Care Alliance, a body that promotes software that is openly published and free for use (see e-novation, 11 October).

He admits that licence-free alternatives to Microsoft Windows are not quite ready for widespread use in the health service, and 'It is not a place to be putting in software that is not as fully polished as it might be'.

But Mr Carnall fears that the deal will make it hard to move users to open-source computing at a later date. Such a move could make sense on two grounds.

First, open source is often substantially cheaper and second, since the software's workings are openly published, its security can be peer-reviewed.

The European Parliament has recommended the use of such open-source software to increase the security of communications and other governments - in particular, France - are showing increasing interest in adopting the open-source model.

Microsoft's deal will give the firm the advantage of familiarity. 'The hardest lock-in to get out of is the user interface, ' says Dr Carnall. 'It is a tremendous investment of highly expensive professionals' time, and changing to anything else becomes painful.'

Microsoft products also encourage use of other parts of its suite by producing files that can only be read properly by other Microsoft products.

For example, its FrontPage web-page designer (included in the NHS deal) allows users to place features on pages that can only be seen properly - or at all - with Microsoft's web-browser Internet Explorer, rather than rivals such as Netscape or Opera.

'Microsoft's whole history has been in taking open standards [such as those used for designing web pages], and trying to 'proprietarise' them, ' says Dr Carnall.

He believes staff should be made aware of such issues when using Microsoft programs.

The health service looks set to deepen its involvement with Microsoft.The company is the dominant software provider in a new collaboration called Lightbulb, which also includes BT, hardware providers Cisco Systems, integration experts SchlumbergerSema and consultants KPMG among others.At the Microsoft conference in December, Lightbulb announced that it is working to develop a platform for patient information sharing within the health service that will work with existing legacy systems (see news focus, page 17, 13 December).

Mr Milburn indicated that negotiations are taking place over projects in two NHS regions - and that the government has plenty of money to spend on them. Some£30m of the£85m 'earmarked' for NHS IT this year has been withheld for later distribution. l A growing concern: Microsoft's XPansion Microsoft was founded in 1975 by Bill Gates, who is still its chair and owns of a large chunk of its shares.

Its big break came when IBM needed an operating system to run its line of personal computers, assembled in a hurry at the start of the 1980s so it could compete with new rival Apple.

IBM chose Microsoft's MS-DOS - a system Mr Gates bought from another designer when he realised IBM needed such software.

As the IBM PC standard became the industry standard, so MS-DOS went with it - later coupled to the Windows interface.

Microsoft products are best categorised as competent but inelegant.The best-known - including MS-DOS, Windows, Internet Explorer and Hotmail - have all been invented or largely developed by people outside the firm, then bought or used as inspiration.The designer of MS-DOS admits he made some 'low-level borrowing' from a rival's software, and the rival feels it went rather further than that.

'Name one thing It is ever invented on its own, 'Scott McNealy, chief executive of rival Sun Microsystems, recently challenged a Business Week reporter.

'If you think of any, send me an e-mail, and I'll research it to find who they bought it from.R&D and M&A [mergers and acquisitions] are the same thing over there.'

Microsoft wins through marketing. It spends huge sums on advertising: $1bn on its latest operating system, Windows XP.

If you haven't seen the adverts, featuring Madonna's song Ray of Light and users flying over green fields, you either do not have a TV or you must have one that only receives BBC.

But the marketing to consumers is almost a sideshow, compared with the power Microsoft exerts over computer manufacturers.

It is very difficult to buy a standard personal computer that doesn't include Microsoft's operating system, Windows, preloaded and included in the price (the alternative is Apple, which requires you to buy a completely different machine).

This is due to deals that make it difficult for hardware makers to sell alternatives to Windows, if they want to keep selling computers loaded with Microsoft's operating system.

The firm's ability to destroy competition was seen in the 'browser wars'of the late 1990s.

Microsoft competed with Netscape to decide which browser was used by the majority of the world's computer users, as millions started to use the worldwide web.

Netscape's product, once used by a clear majority, is now used by fewer than one in five.

Did Microsoft win by having a better product? Not really.As with computer-makers, so with internet service providers - Microsoft did deals with the biggest ones, so that their users would be steered towards Microsoft's Internet Explorer.

Freeserve and AOL, the UK's biggest ISPs, both provide users with Microsoft's browser - even though AOL now owns Netscape.

And Microsoft insisted that computer-makers install its browser in advance of purchase, and leave its icon prominently on the Windows desktop.

At the moment, the media-player marketplace - software that plays music and video - is led by a firm called Real Networks.

Microsoft's product is not superior, but the firm is using its tactic of placing it on new PCs along with Windows.

The European Commission has launched an anti-monopoly case against the firm and several US states have been fighting Microsoft with anti-monopoly laws for several years.So far, no cases have reached a conclusion.

Microsoft has an eye to dominating electronic commerce through its .Net strategy.This will involve people paying for goods through their Microsoft-issued passport, rather than directly passing on their credit card numbers to a merchant.Microsoft would handle the payment, and get a cut.

For a world-dominating monopolist, Bill Gates is a likeable one.He has given his charitable foundation almost $20bn and it is spending some of this money on mass vaccinations in Africa.

And unlike a classic monopolist, his company has until recently avoided using its overwhelming dominance to jack up prices.

However, corporate users are currently being moved from a purchase agreement, where they buy the software outright and give Microsoft more money only when they want an upgraded version, to a rental model, where they pay a regular fee for all upgrades (whether they want them or not).

Some large companies think their payments to Microsoft will more than double as a result.And the NHS deal uses such a rental model.