8 October 2004 Microsoft has stepped up its campaign against open source software with CEO Steve Ballmer claiming commercial releases are better for the European economy.

Ballmer said that recent research from analyst firm IDC bolstered its claims to be better for European economies than open source alternatives.

The research in question, commissioned by Microsoft, reports that the IT industry will create 2.1 million new jobs and $160 billion in new tax revenues in Europe by 2008, if the current return to growth in IT spending continues. IDC found that software’s contribution to this is disproportionately large for its share of the IT market.

“Software is the most dynamic [IT] sub-segment in Europe,” said Thomas Vavra, one of the IDC analysts who authored the study. Although software makes up around 20% of total IT spending, it generates over half of all IT tax revenues and jobs, he added.

About a third of those jobs stem from the Microsoft “ecosystem” of partners, service providers and associated hardware and software product developers. IDC also said that for every dollar of Microsoft’s European revenue, a further $7.50 is generated by other companies in that ecosystem.

Ballmer used the report to fuel Microsoft’s marketing assault on Linux and other open source software alternatives. “People need to understand not just the technical advantages of our products but the economic arguments of commercial software,” he told assembled journalists at the Microsoft Executive Partner Summit in Lisbon.

IDC did not report on the economic impact of open source software.

Ballmer also dismissed European politicians and academics who argue that open source brings unique economic benefits to a country, particularly given the US focus of most large software companies. “Microsoft software and other commercial software really creates jobs,” he said. “If you really want to have a software industry people have to be able to charge for their software.”

He also criticised politicians for being too easily influenced by the “very noisy” open source community and said academics only preferred open source software because universities typically use Unix, the operating system from which Linux evolved.

Ballmer hammered the message home when taking questions from partners attending the Lisbon conference. One Eastern European Office reseller asking for advice on public sector contracts he was losing to alternatives such as Sun Microsystems’ StarOffice was told: “steveb@microsoft.com – email me immediately and we’ll send in the cavalry… If you’re losing business to open source in the public sector we can get Microsoft people interested very very quickly.”

StarOffice is not strictly speaking an open source product: Sun charges for its StarOffice licences. StarOffice is however, based on the open source desktop system OpenOffice.

Microsoft claims Windows can beat the Linux challenge on the basis of total cost of ownership, security and intellectual property risk.