Originally created 07/11/97

Gates, Ellison offer gifts with strings attached



Let's look a gift horse in the mouth. And, likewise, a Trojan horse.

The gift horse comes from Bill Gates of Microsoft and the Trojan horse from Lawrence Ellison of Oracle Systems. In separate offers, they are pledging something in the neighborhood of $500 million in computer-related stuff to schools and libraries.

Sounds good? Pooh! Lots of strings are attached to the gifts, which in practice look like promotional ploys for each company's products. Part of the Microsoft gift will be in the form of Microsoft products, which don't cost Gates much to give away, and will, of course, in the future require the purchase of more Microsoft products to maintain compatibility in the future. Ellison, meanwhile, will use his gift of $100 million to fund grantees' acquisition of so-called Network Computers, which he's promoting as an alternative to the Windows/Intel standard.

Enthusiasts have compared the two men to turn-of-the century industrialist and philanthropist Andrew Carnegie.

But Carnegie would never have dreamed up a stunt like this - using charity as a cover to promote his business. After the bitter Homestead strike in 1892 Carnegie was interested in repairing his reputation. Hence he gave communities libraries, lock, stock and card catalog.

If Carnegie were of the Gates-Ellison mode, he would have given communities books - provided they raise money to build the libraries exclusively of Carnegie steel.

Any time we discuss "gifts" like these, the first thing we have to get squared away is how much computers on networks cost in an institutional setting. The basic numbers were worked up by the Gartner Group back in 1995: Over five years, assuming software and hardware are upgraded regularly, it works out to about $7,000 a year, on average. Macs are slightly cheaper than Windows 95, and Windows 3.1 costs around $8,000 a year. The study added much impetus to Ellison's network computer movement, which is presumed to have much lower operating costs, because data and programs are centralized, and thus easy to control.

Whew! - $7,000 a year for something that costs only about $3,000 to buy? Turns out that people, as usual, are the biggest expense: Computers need tech-support people and tech-support supervisors; networks need network troubleshooters and network administrators. Software and hardware upgrades cost money. And then there are those pesky users wasting time by installing games, which destabilize the computers and require troubleshooting, plus the monthly fees for connecting to the Internet, plus ... well, you get the idea. Oh, and don't forget site licenses for Surf Watch and the various other control programs that will now be needed because the Internet is officially and forever X-rated.

If you're an old-timer like me, you may have assumed the PCs were cheap. Well, they aren't. In the early days they only seemed cheap, because they were maintained by enthusiasts who worked essentially for free. Once PCs became ubiquitous, we ran out of enthusiasts. The support system had to be paid and bureaucratized. Costs soared.

Costs to schools and libraries seem to have similar potential for growth. We know that in many districts, enthusiastic teachers are getting fabulous results with all sorts of creative computer education programs, and they aren't even spending a lot of money doing it. Lots of libraries spend nowhere near $7,000 a year on each of their computers. But here's the question: What happens when computer ed becomes ubiquitous and bureaucratized, which is precisely what Gates and Ellison are encouraging? Don't be surprised if costs resemble those of private industry, with profits accruing primarily to the generous folks whose gifts made it all possible.

The other main point about costs is that although schools certainly can afford computers, they can't afford them for everyone. Nationwide, the cost of educating primary and secondary students is about the same as the cost of owning a networked computer: $7,000 to $8,000 a year. We're not about to match colleges, which encourage every student to have a PC; we'll be lucky if we can afford to have one PC that every five kids can share, a respectable ratio recommended in some studies. How's this for a rule of thumb?: A modest computer education program (one PC per five students) has the potential to raise your school taxes 20 percent, or crowd out spending on more traditional forms of instruction. Are you sure you want that program?

Against this background, $500 million spread out over a few years is a drop in the bucket. What Ellison and Gates are doing looks like the Barbie Doll scenario: Give away the doll to sell accessories. Given the recurring costs of computers, real charity would consist not of hardware and software, but of computer endowments - i.e. just as rich guys donate money that's invested to pay a professor's salary, so should our putative computer philanthropists give gifts that keep on giving. In Gates' case it would be a whole lot more impressive if Microsoft simply donated site licenses for all its products, in perpetuity, to needy schools. Ellison, on the other hand, should take his $100 million and set up a fund to pay the salaries of computer educators.



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