The North Africa Journal: Microsoft's North Africa Opportunity and Challenge

Microsoft's North Africa Opportunity and Challenge
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The North Africa Journal on 17 November, 2009 08:15:00
 
In Algeria for example, the banking sector still uses outdated technologies,
making a refresh cycle potentially appealing but very difficult to achieve given
the technical complexity the transition would require. As a result, potential
buyers continue to hold onto what they have, inhibiting sales of software,
applications and even hardware.
The company dispatched senior executives in late 2008 to share Microsoft
displeasure at the pace in which technology introduction is moving. Regional
Manager Seddik Sherif noted that Algeria’s economic prosperity in the future
will be linked to the modernization and performance of its banking sector.
While Mr. Sheriff’s statement feels more like a sales pitch, no one should
fault him for telling the truth. Indeed, Algeria’s banking sector reform has
been frozen for the past eight years. Despite the various initiatives put in
place, the banking sector remains as entrenched in its mediocrity as ever
before. And most of the problems come from the lack of political will to change
the situation. Some, however and sadly applaud Algeria’s stance in keeping the
banking sector frozen in time, calling it the right approach amid a major global
financial sector collapse. That only perpetuates the sort of poor services
Algerian consumer face.
Identifying the region and Algeria as key market opportunities, Microsoft opened
an office in Algiers three years ago. In 2007, the charismatic and vocal Chief
Executive of Microsoft, Steve Ballmer, traveled to Algiers as part of a North
Africa-European tour. In Algiers, Ballmer spoke of a vision that included his
company’s support of Algeria to develop its potentialities utilizing training,
education, innovation, leading ultimately to job creation.
But Microsoft’s problems are not just about the resistance of the banking
sector in Algeria. Piracy remains a substantial problem in the North African
nation, in fact in the entire region, so much so that the company hoped the
launch last year of Office 2007 and Windows Vista operating system would begin
to put an end to piracy. Commenting on piracy, Seddik Sherif noted that “if we
let it expand, piracy will discourage the culture of creativity, innovation, and
value and job creation. And before investing, companies would want to benefit
from legal protection.” Microsoft has made offers to the Algerian government
to support it in the area of intellectual property rights enforcement.
Piracy is a global problem for software makers and in the region it’s not just
an Algerian phenomenon. Analysts in the Maghreb region estimate that between 70%
and 90% of the software currently used there is pirated and for Microsoft this
means potentially a loss of $150 million.
Seeking to slow the pace of piracy, since it is impossible to eliminate it
altogether, Microsoft and other software makers formed a watchdog and
enforcement unit called the Business Software Alliance (BSA), which established
a presence for the first time in the Maghreb in 1999. While the BSA’s
initiatives to crack down on piracy have yet to be fully felt, it managed to get
public sector organizations in the region to fully endorse its licensing and
payment rules. In Tunisia, Microsoft is expected to receive TND 7.8 million in
2009 for the software used by the various administrations and ministries.
That’s roughly the same in US dollar. The biggest user of Microsoft software
in Tunisia is the ministry of higher education, scientific research and
technology, which will contributed with a payout of TND 2.4 million. Other top
users of MS products are the ministry of education and training (TND 852K),
Justice and Human Rights (TND 813K), and others.
For Microsoft, there is also a perception problem. The problem is not a value
judgment about the company about as a result of its massive market share and its
dominance in key areas of computing technologies. Dominating the operating
system market for client PCs is seen by North Africans as a difficult position
to accept. And therefore alternatives to Microsoft have long been sought in the
region. For instance local PC makers are generally encouraged to deploy the
Linux platform. In Tunisia, for instance, there has been a strong open source
community advocating for free software. Its members have often been vocal
against Microsoft. Media campaigns by pro open source advocates were launch to
make their case; including statements that Mozilla Firefox web browser has
surpassed Microsoft’s Internet Explorer. This is not a figure The North Africa
Journal could confirm.
For Microsoft, these advocates are not just a negligible group of technology
militants of the 21st century. Big Tunisian companies have heard the message and
have been deploying competing platforms to Microsoft products. The country’s
retirement administration Caisse Nationale de Retraite et de Prévoyance Sociale
(CNRPS) and power and utility monopoly STEG, are among the many other companies
have deployed open source software arguing that it not only saves them in terms
of cost but provides a different value proposition than proprietary software.
This is obviously an issue that concerns not just Microsoft but all software
makers who do not allow access to their codes.