MICROSOFT, GOVERNMENT INK CONTRACT

UNCLAS MUSCAT 001282

SIPDIS

SENSITIVE
SIPDIS

STATE FOR NEA/ARP, EB/TPP/MTA/IPC, OES/PCI

E.O. 12958: N/A
TAGS: BEXP ECON KIPR TSPL ETRD MU
SUBJECT: MICROSOFT, GOVERNMENT INK CONTRACT

REF: MUSCAT 1098

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SUMMARY
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1. (U) The Omani government recently concluded a three-year,
five million USD per year agreement with Microsoft for the
use of the company's licensed products. The contract, which
includes a commitment by Microsoft to invest two million USD
per year in training programs for government employees and
the general community, represents the Omani government's
commitment to protecting intellectual property in advance of
the FTA's implementation. End Summary.

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CONTRACT SIGNED
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2. (SBU) On August 22, Econoff met with Microsoft country
manager Sami al-Lawati to discuss his company's recent
partnership agreement with the Omani government. Lawati
noted that per the three-year contract, the Omani government
will pay Microsoft five million USD per year for the use of
22,500 desktop software licenses, which will enable the
government to upgrade its Windows platform and Microsoft
Office applications. In turn, Microsoft will invest two
million USD per year in training programs for government
employees and the general community.


3. (SBU) The deal represents a second chance for Microsoft to
establish a long-term relationship with the Omani government.
Microsoft initially signed a contract with the Oman in June
2000, shortly before the Sultanate's accession to the WTO.
The relationship did not develop, however, resulting in the
government's continued use of Windows 98 instead of upgrading
to Windows 2000. Lawati commented that Microsoft intends to
avoid replicating previous mistakes by building a
relationship that creates continued value for the government,
as it has done in Egypt and Jordan.

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BUILDING IT CAPACITY
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4. (SBU) As part of its plan to create value, Microsoft has
committed to investing in Oman's IT capabilities. Lawati
commented that this commitment is essential to efforts to
raise technology usage in government operations, which
currently is very low. Coupling with the government's E-Oman
initiative, Lawati noted that Microsoft will reach out to the
community by installing computer laboratories in 10 schools
for use in the evening hours. Lawati also said that
Microsoft would focus on government personnel development
through a support and innovation center. Under this
proposal, Microsoft would provide intensive training to 20-30
recent university graduates, who would then form IT steering
committees within their respective ministries. Finally,
Lawati expressed Microsoft's interest in fostering IT
communities in the universities and high schools through the
promotion of IT clubs.


5. (U) Building on these proposals, Econoff inquired about
Microsoft's interest in participating in a USG-sponsored
collaborative effort that promotes e-mathematics and
e-science curricula in the elementary schools (reftel).
Lawati expressed interest in this concept, and took with him
a description of the proposal for further consideration.

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PIRACY DOWN, PROMOTION UP
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6. (SBU) Lawati noted that the Omani government's approval of
the partnership agreement signified its commitment to
protecting intellectual property. While recognizing that
software piracy remains a concern in Oman, Lawati remarked
that it's now generally more difficult to purchase pirated
software in Oman. Microsoft intends to promote its new
products more actively in Oman, starting with an advance
event on September 4 for its new Vista operating system and
Office 2007, which will be available in Oman by December

2006.
GRAPPO