http://duartes.org/gustavo/blog/post/why-brazil-loves-linux
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Brazil often makes Linux-related headlines, the latest being the
adoption of KDE in Brazilian public schools. It's clear that Brazil is
enamored with Linux, but why? This is an important question for
Microsoft since emerging markets are key to sales growth. Microsoft's
Annual Report 2007 reported that "impressive growth included India,
China, and Brazil which all delivered revenue growth that topped 40
percent", which is much faster than growth in developed countries.
These markets are also friendly towards Linux and pose significant
challenges for Microsoft. This post is my take on the reasons for
Brazil's fondness of Linux. I speak for Brazil since I was born and
raised there, but I think much of this applies to the other BRIC
countries and emerging markets in general.
The first and obvious argument is economic: free as in beer is a big
deal in Brazil's economy. The table below contrasts the economics of
license costs in the US and in Brazil:
US Brazil
Gross National Income (GNI) per capita $44,710 $4,710
Cost of Windows Vista Business $186 $364
Cost of MS Office 2007 Standard $289 $587
Cost of Business Licenses as % of GNI per capita 1.06% 20.1%
Cost of Windows Vista Home Basic $116 $252
Cost of Office Home/Student $109 $117
Cost of Home Licenses as % of GNI per capita 0.5% 7.8%
All figures in US dollars. An exchange rate of USD$1 = R$1.70 was used
to compute the cost of licenses in Brazil.
You might be surprised to learn that Microsoft licenses are nearly
twice as expensive in Brazil in absolute terms. I imagine Microsoft
charges about the same and Brazil's brutal tax burden makes up the
rest (the taxes are built into the price). But the interesting result
is the relative price of licenses in each society, captured as % of
GNI per capita. As a proportion of national incomes, business licenses
are nineteen times more expensive to Brazilian society and home
licenses are fifteen times more expensive. While GNI per capita is not
a perfect figure, it reflects the incomes people make, how much they
spend to live, and how much they pay in taxes. It is a crucial number
when it comes to public policy; it's not hard to understand why
rational policies must dodge licensing costs when possible. If there's
any hope of widespread computer access, then surely we can't expect
people to spend 7.8% of their annual income on Microsoft software
licenses alone. The burden on small businesses is also prohibitive.
This order-of-magnitude difference is a fundamental problem that can't
be solved by piecemeal license giveaways. Suppose Microsoft gave out
Windows and Office wholesale to all schools. Then what happens if
those kids need a computer at home or in their parents' business?
License costs are simply out of whack with respect to most of society.
Using Linux in public schools, rarely attended by richer kids, seems
inescapable.
Notice that I didn't use Windows Vista Starter Edition in the figures.
This is because I find the limitation of three simultaneous programs
absurd. It's hard to believe Microsoft put in such an abominable
restriction; it's one thing to quietly omit features, it's quite
another to slap people on the face with "Sorry, no, only 3 programs!
Click OK to continue." Even the limited hardware supported by Vista
Starter can easily run multiple programs, so that's no excuse. I
imagine a kid trying to learn programming in such a machine, trying to
run a few tools plus a test application, and being told to bugger off.
How is this bridging the digital divide? Besides, there are
limitations on buying Vista Starter - a family receiving a donated
computer, for example, cannot buy a retail version of it. And to cap
it off, if they went ahead and bought OEM, the dollar figure for Vista
Starter + Office Home comes to 5% of GNI per capita, still an order of
magnitude above the US figure.
Looking at these numbers, you might wonder how Microsoft sales could
grow 40% in Brazil last year - I mean, do they even have computers
there? It turns out that Brazil has both the 10th largest economy in
the world and the 11th worst distribution of income. There are wealthy
households, businesses, and government departments to whom license
prices matter far less. For example, after the dollar plunge the cost
in dollars of a programmer in Brazil is close to that of one in the
US, provided the employer is paying all taxes (the norm for mid-size
and large businesses). These wealthier pockets comprise a sizable
market whose landscape is more similar to the US: labor costs dwarf
license costs, MS Office is a near-monopoly, and inertia is in
Microsoft's favor. Since this market is in Brazil's economy the
licensing costs still consume relatively more purchasing power, but
Microsoft can definitely compete in these niches. Except there's more
to the story than economics.
Many cultural issues work against Microsoft to mobilize Brazilians in
favor of the Penguin. I'll hit up the three I deem biggest: 1) utter
disregard for copyright, 2) strong anti-Microsoft feelings, and 3)
Linux alpha geek monopoly. A thorny reality aggravates the first two
issues: anti-American sentiment. It's worth looking at this sentiment
for context. The Pew Research Center runs the Pew Global Attitudes
Project to track global public opinion on a variety of issues. Their
latest report shows continued decline in US image, which has plummeted
around the globe in the past 5 years. Here's the data:
Anti-US sentiment in the world
I was shocked to see these results at first. Things might not be as
bleak as the numbers suggest though. Some of the backlash is not
structural, but rather directed at the current US Administration. It
may well subdue come January 2009. Yet it's important for American
companies to factor this in when thinking about markets abroad.
Nothing new there, except for how bad things got. Anti-American
sentiment is particularly strong in 3 of the BRIC: Brazil, Russia, and
China. (In Brazil this is only a political/ideological thing,
one-on-one people are still as friendly as ever towards Americans and
everyone else.) Keep these numbers in mind when thinking about the
factors below, starting with disregard for copyright.
When I was growing up in Brazil, paying for software licenses was
about as natural as a third arm growing out of your back. Whenever you
needed software, you'd dial up a friendly pirate and buy a
"collection" for, uh, $30. That included, my friends, instant home
delivery: the guy would drive to your house and deliver the
collection. If you were programming at night, he might even bring you
a pizza. The best pirates had good access to the warez scene and could
find anything in case you had a custom request. In the collection
you'd find cracked versions of several major pieces of software from
various manufacturers. How convenient. Borland Delphi? Check. Visual
Studio? Check. Windows NT 4.0 Server, Workstation? Check. Linux? Check
(saves you the download). It was like MSDN for the whole computer
industry! The piracy happened regardless of income levels - people
"buying" the software were by no means poor (otherwise they wouldn't
have a computer in the first place, at that point in time). Many could
easily afford licenses, yet felt absolutely no qualms about piracy.
The whole culture disregarded copyrights deeply. To most people, the
pirate was doing honest work: downloading all this stuff, burning it,
delivering it. An honorable job.
Things have changed since then, but not much. Copyright enforcement is
more serious; piracy within mid-size or large businesses is rare.
There is more copyright awareness (or indoctrination, depending on
whom you ask). Home users still pirate anything they can though. This
is not restricted to software either: visit any campus in Brazil and
you'll see rampant photocopying of text books. Street vendors sell
DVDs filled with MP3s, movies, you name it. I'm sure Hollywood execs
have nightmares where they're roaming the streets of Brazil. The
culture still expects free distribution and the environment is very
hostile to proprietary software licenses.
Before Windows Genuine Advantage, Microsoft's strategy was to ignore
the pirates: sell to the corporations, let everyone else copy it. Now
regular people are growing third arms and paying for Windows licenses.
Fair enough: middle-class fat cats should not be ripping off your
software. The trouble is that nowadays not all cats are fat: years of
sound macroeconomic policy have allowed lower-middle-class people to
buy computers. This is a change from when I was there. There are now
many folks who, though not poor, definitely have a very hard time
paying for licenses. They either go to Linux or go unpatched. The need
to buy software would effectively keep these families out of
computing: they do back flips just to get the hardware itself, in the
hopes of giving their children a better shot. And richer people resent
paying for software, however messed up that is. Every customer cut off
by Windows Genuine Advantage is a possible conversion to Linux or at
the very least a little more pressure towards migration. If people had
to pay for Office too, there'd be gnashing of teeth. I'm not
suggesting Microsoft is responsible for fixing severe income
inequality or supporting middle-class free loaders; that's just the
nut they need to crack with a creative revenue model because Linux
fits like a glove. On to the next issue.
Vista Starter Limits You to Three Programs
Vista Starter caps you at 3 programs. This is not how you win friends
and influence people.
Brazil imported the anti-Microsoft stance common in American geeks,
but on top of the usual arguments Microsoft is foreign. This adds fuel
to the flame. To the Brazilian Microsoft hater, not only there is an
"evil monopoly", but its profits are repatriated and its jobs are
elsewhere. Practices like the 3-program limitation on Vista Starter
further erode good will (Brazilians call it the "castrated Windows"
among other colorful names). Add a dash of anti-American sentiment and
you've got some serious resistance. This fiery mood has a strong
influence, from the teenager hanging out in #hackers on Brasnet to IT
departments to the federal government. Even in a rational
self-interest analysis, one might rightly point out that if free/open
source software (FOSS) were to wipe out Windows, negative effects on
Brazil's economy are likely minimal. The wealth, jobs, and opportunity
created by Microsoft aren't in Brazil (productivity gains might be,
but that's a whole different argument). The trade offs of a potential
Linux/Google take over are different when there's no national
off-the-shelf software industry, plus Google's revenue model works
beautifully in a developing country. This mix of ideological and
rational arguments torpedoes Microsoft's support.
The third cultural issue working for Linux is more subtle. In the US
people talk about Microsoft losing the alpha geeks, but in Brazil FOSS
has already reached a near-monopoly on them. Again, the standard
reasons apply but are augmented by the local realities. Before FOSS,
interesting software work was very rare in Brazil and the chance to
shape widely used products practically did not exist. Imagine a place
where 80% of programmers build boring, low-powered line-of-business
applications working in conditions exactly opposite of Peopleware.
That's the US. Make it 99% and you have Brazil. In the US we have a
wildly dynamic economy full of start-ups and interesting companies
soaking up talent fast, but not so in Brazil. David Solomon, co-author
of Windows Internals, was working for DEC at 16. But what if there is
no one building a kernel in a 3,000-mile radius? Emigration was the
most realistic possibility for interesting work. A 16-year-old would
have been out of luck.
The FOSS revolution plus the Internet changed all this. Now people in
Brazil can actually develop interesting and widely used programs.
We've got kernel hackers like Marcelo Tosatti, who maintained the 2.4
Linux kernel series, and Arnaldo Carvalho de Melo, who co-founded the
Conectiva distribution. There are RedHat employees, Debian
contributors, committers on various projects, and so on. Lua, the
programming language, comes from Brazil. There's a practical advantage
in being able to, say, tune a distribution for a particular purpose
(e.g., the distribution being delivered to public schools). But beyond
that it's inspiring to finally be able to work with talented people in
cool projects and have a chance to participate, rather than be handed
down a proprietary product built abroad over which you have zero
control. People are excited about and grateful for this. By the time
you mix up these elements nearly all talented CS students and alpha
geeks are well into the Linux camp. Unlike the US, the dynamic economy
isn't there to add some fragmentation. When these people go on to make
technology choices in government or industry, guess what they'll pick?
So that's it. I think these are the main factors in Brazil's love
affair with Linux: economics, disregard for copyright, anti-Microsoft
sentiment, and massive alpha geek support. These factors feed off each
other, all pushing towards Linux. Millions of kids using KDE would
impact the work force eventually. If Microsoft is overzealous in their
anti-piracy efforts, it might precipitate faster changes in this
delicate market. Meanwhile, Google Docs and Open Office are catching
on. There are tactical moves Microsoft could make to counter Linux
momentum, like a more sustainable licensing model for homes and small
businesses (maybe their announced annuity licensing?), better native
branding, and perhaps some native development. But Google has done all
three already and is very well-liked in Brazil despite the anti-US
feelings. My Brazilian friends, even a pragmatic IT manager who plays
poker with Microsoft Brazil employees, seem to operate on the
assumption that an eventual Linux take over (with some combination of
Google/Google Docs/Open Office) is just a matter of time. What holds
it back is that all the factors discussed here can spark things up,
but until desktop Linux is ready to catch on fire you get much hype
and little change. The wood does seem drier and drier, so we'll see.
What do you think?
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