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Date Posted: 11:30:02 03/20/05 Sun
Author: No name
Subject: MicroSoft's PA PowerPort Deal - Loss of PA Jobs
In reply to: 's message, "Microsoft CEO is on Accenture's Board of Directors" on 11:28:55 03/20/05 Sun

MicroSoft’s PA PowerPort Web Deal Causes Loss of PA Jobs -
www.state.pa.us Despite these laudable goals, some of Pennsylvania’s small Web companies objected, claiming there is no need for government intervention because they already are providing these services. By giving a prominent position to Microsoft’s PA Small Business Network on the state Web site, the government is setting up Microsoft as a virtual preferred vendor. “Microsoft gets positioned on the most visited Web site in the state with this deal,” said Wayne Kessler of Kessler & Freeman Inc. in Mechanicsburg. His company, a 2 1/2 man shop that has built Web sites for about 50 commercial and government customers, takes in about $100,000 a year in revenue — the same amount that Microsoft is donating to the state in free Web services. Kessler and others also contend the state government should not be offering other services, such as free e-mail, that are provided by the private sector. “The government is talking about competing with us and using our tax dollars to do it,” said Bill Hall, chief executive officer of Keystoneweb.com LLC in Montoursville. Hall describes Keystone-web.com as a full-service Internet company, offering domain name registration, Web site development, Web hosting, and maintenance. The company has offices in three cities and about 500 paying clients in 85 percent of the state’s counties, but “we’re a flyspeck on the wall compared to Microsoft,” he said. Both Kessler and Hall said the Ridge administration did not hold sufficient public discussion about the PA PowerPort plan. They would like the state legislature to hold hearings and look into the deal before the agreement with Microsoft is finalized. If the legislature makes a full examination and then decides that the PA PowerPort deal is a good idea, Kessler said he would accept that decision. It is unclear how many other small Web companies also oppose PA PowerPort. An online petition calling for a legislative inquiry thus far has garnered little more than 70 signatures. State officials said the complaints are coming from just a handful of companies, and that many companies responded positively to the initiative at the first stakeholders meeting, held April 20 in Bryn Mawr. But Hall said this is not surprising. “Only a small number are complaining because most are just trying to scratch out a living and don’t have time to bother,” he said. Regarding fears that Microsoft will dominate the state portal, state spokesman Elliott said other companies and their services will be listed on the Web site along with Microsoft. “Microsoft is not leading this. We are leading this,” he said Microsoft officials also said the company has no intention of squeezing out smaller Web companies. Philip Moyer, who is heading up the project for Microsoft, said the company partners with thousands of companies, such as Keystoneweb.com and Kessler & Freeman, to install its software. “At the end of the day, we sell software,” not consulting services, he said. And for every dollar of Microsoft software that is sold, consulting companies bring in $5 to $6 worth of services, he said. “The spirit of PA PowerPort is to serve as an incubator for more Internet business throughout the state,” Elliott said. “We see it as helping companies get their feet wet [on the Web]. Then they will go to local companies.” Although Elliott and Moyer argue that PA PowerPort www.state.pa.us will not lock customers into Microsoft products, Hall is skeptical. “The government is helping the monopoly,” he said. Like Pennsylvania, many state governments are trying to stimulate technology development and e-government services through a variety of programs and business partnerships. These include giving tax breaks to attract high-tech businesses, providing seed money for investing in innovative companies, and using the governments’ purchasing power to stimulate the building of telecommunications services in rural and underserved areas. “It’s a judgment call” whether and how the government should step in, said Missouri’s Benzen. In Missouri, for example, a few years ago the government gave matching funds to small communities to help establish Internet connections in areas where it was not profitable for the private sector to provide services. But today the private sector is ready to serve these communities and so resents the competition from the local non-profit organizations that were created with state funding to obtain Internet service. “Sometimes you’re damned if you do and damned if you don’t,” Benzen said. “You can’t do these things without stepping on toes. But the alternative is to do nothing.” To some extent, the situation in Pennsylvania is similar to the controversy that arises when Wal-Mart moves into a small community and threatens local stores, said John Kost, vice president with Siebel Systems Inc. of San Mateo, Calif., a company that provides customer relationship management solutions to governments and businesses. “Quite simply, it’s best deal vs. local content,” he said. Pennsylvania’s mistake may have been that its stakeholders meetings are coming after the announced deal with Microsoft, rather than before. “I think it’s good that Pennsylvania is holding these meetings to deal with the policy implications,” said Don Heiman, chief information officer in Kansas. It is in such forums “that you can find wisdom and balance.”
Thank PA Gov Schweiker for this mess.

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